Here's Why Shareholders May Want To Be Cautious With Increasing Perma-Pipe International Holdings, Inc.'s (NASDAQ:PPIH) CEO Pay Packet

In the past three years, the share price of Perma-Pipe International Holdings, Inc. (NASDAQ:PPIH) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 26 May 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Perma-Pipe International Holdings

Comparing Perma-Pipe International Holdings, Inc.'s CEO Compensation With the industry

Our data indicates that Perma-Pipe International Holdings, Inc. has a market capitalization of US$55m, and total annual CEO compensation was reported as US$830k for the year to January 2021. Notably, that's a decrease of 33% over the year before. We note that the salary of US$420.0k makes up a sizeable portion of the total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$551k. Accordingly, our analysis reveals that Perma-Pipe International Holdings, Inc. pays David Mansfield north of the industry median. What's more, David Mansfield holds US$1.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	US$420k	US$382k	51%
Other	US$410k	US$854k	49%
Total Compensation	US$830k	US$1.2m	100%

On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Perma-Pipe International Holdings is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Perma-Pipe International Holdings, Inc.'s Growth Numbers

Perma-Pipe International Holdings, Inc.'s earnings per share (EPS) grew 48% per year over the last three years. It saw its revenue drop 34% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Perma-Pipe International Holdings, Inc. Been A Good Investment?

Few Perma-Pipe International Holdings, Inc. shareholders would feel satisfied with the return of -31% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Perma-Pipe International Holdings that investors should look into moving forward.

Important note: Perma-Pipe International Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. 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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