Here's Why Shareholders May Want To Be Cautious With Increasing Sypris Solutions, Inc.'s (NASDAQ:SYPR) CEO Pay Packet

Key Insights

• Sypris Solutions' Annual General Meeting to take place on 5th of June
• Salary of US$515.0k is part of CEO Jeffrey Gill's total remuneration
• The overall pay is comparable to the industry average
• Sypris Solutions' three-year loss to shareholders was 56% while its EPS was down 92% over the past three years

The underwhelming share price performance of Sypris Solutions, Inc. (NASDAQ:SYPR) in the past three years would have disappointed many shareholders. Per share earnings growth is also poor, despite revenues growing. Shareholders will have a chance to take their concerns to the board at the next AGM on 5th of June and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

Check out our latest analysis for Sypris Solutions

How Does Total Compensation For Jeffrey Gill Compare With Other Companies In The Industry?

At the time of writing, our data shows that Sypris Solutions, Inc. has a market capitalization of US$33m, and reported total annual CEO compensation of US$844k for the year to December 2023. That's slightly lower by 5.3% over the previous year. Notably, the salary which is US$515.0k, represents most of the total compensation being paid.

For comparison, other companies in the American Auto Components industry with market capitalizations below US$200m, reported a median total CEO compensation of US$656k. So it looks like Sypris Solutions compensates Jeffrey Gill in line with the median for the industry. What's more, Jeffrey Gill holds US$4.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$515k	US$493k	61%
Other	US$329k	US$399k	39%
Total Compensation	US$844k	US$891k	100%

Talking in terms of the industry, salary represented approximately 13% of total compensation out of all the companies we analyzed, while other remuneration made up 87% of the pie. It's interesting to note that Sypris Solutions pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Sypris Solutions, Inc.'s Growth Numbers

Over the last three years, Sypris Solutions, Inc. has shrunk its earnings per share by 92% per year. Its revenue is up 20% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Sypris Solutions, Inc. Been A Good Investment?

With a total shareholder return of -56% over three years, Sypris Solutions, Inc. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for Sypris Solutions (1 is a bit concerning!) that you should be aware of before investing here.

Switching gears from Sypris Solutions, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.