Shareholders May Be More Conservative With Ellipsiz Ltd's (SGX:BIX) CEO Compensation For Now

In the past three years, the share price of Ellipsiz Ltd (SGX:BIX) has struggled to generate growth for its shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 22 October 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Ellipsiz

Comparing Ellipsiz Ltd's CEO Compensation With the industry

At the time of writing, our data shows that Ellipsiz Ltd has a market capitalization of S$63m, and reported total annual CEO compensation of S$882k for the year to June 2021. This means that the compensation hasn't changed much from last year. Notably, the salary which is S$652.7k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below S$270m, reported a median total CEO compensation of S$224k. Hence, we can conclude that Kelvin Lum is remunerated higher than the industry median.

Component	2021	2020	Proportion (2021)
Salary	S$653k	S$679k	74%
Other	S$229k	S$191k	26%
Total Compensation	S$882k	S$870k	100%

On an industry level, roughly 83% of total compensation represents salary and 17% is other remuneration. Ellipsiz pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Ellipsiz Ltd's Growth

Over the past three years, Ellipsiz Ltd has seen its earnings per share (EPS) grow by 72% per year. Revenue was pretty flat on last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Ellipsiz Ltd Been A Good Investment?

Given the total shareholder loss of 14% over three years, many shareholders in Ellipsiz Ltd are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Ellipsiz you should be aware of, and 1 of them shouldn't be ignored.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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