Here's Why We Think Polar Power, Inc.'s (NASDAQ:POLA) CEO Compensation Looks Fair

Key Insights

• Polar Power's Annual General Meeting to take place on 20th of December
• CEO Arthur Sams' total compensation includes salary of US$275.0k
• Total compensation is 50% below industry average
• Over the past three years, Polar Power's EPS grew by 51% and over the past three years, the total loss to shareholders 91%

Shareholders may be wondering what CEO Arthur Sams plans to do to improve the less than great performance at Polar Power, Inc. (NASDAQ:POLA) recently. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 20th of December. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for Polar Power

Comparing Polar Power, Inc.'s CEO Compensation With The Industry

Our data indicates that Polar Power, Inc. has a market capitalization of US$7.2m, and total annual CEO compensation was reported as US$330k for the year to December 2022. That's a notable increase of 20% on last year. Notably, the salary which is US$275.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the American Electrical industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$664k. Accordingly, Polar Power pays its CEO under the industry median. Furthermore, Arthur Sams directly owns US$2.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	US$275k	US$275k	83%
Other	US$55k	-	17%
Total Compensation	US$330k	US$275k	100%

On an industry level, around 21% of total compensation represents salary and 79% is other remuneration. According to our research, Polar Power has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Polar Power, Inc.'s Growth Numbers

Polar Power, Inc.'s earnings per share (EPS) grew 51% per year over the last three years. Its revenue is up 26% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Polar Power, Inc. Been A Good Investment?

Few Polar Power, Inc. shareholders would feel satisfied with the return of -91% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss is certainly disheartening. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. A key focus for the board and management will be how to align the share price with fundamentals. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Polar Power (2 are potentially serious!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.