We Think Ultralife Corporation's (NASDAQ:ULBI) CEO Compensation Package Needs To Be Put Under A Microscope

The results at Ultralife Corporation (NASDAQ:ULBI) have been quite disappointing recently and CEO Mike Popielec bears some responsibility for this. At the upcoming AGM on 21 July 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Ultralife

How Does Total Compensation For Mike Popielec Compare With Other Companies In The Industry?

At the time of writing, our data shows that Ultralife Corporation has a market capitalization of US$134m, and reported total annual CEO compensation of US$737k for the year to December 2020. That's a notable decrease of 9.2% on last year. We note that the salary portion, which stands at US$531.8k constitutes the majority of 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$702k. So it looks like Ultralife compensates Mike Popielec in line with the median for the industry. Furthermore, Mike Popielec directly owns US$2.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$532k	US$527k	72%
Other	US$205k	US$284k	28%
Total Compensation	US$737k	US$811k	100%

On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. According to our research, Ultralife has allocated a higher percentage of pay to salary in comparison to the wider 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.

Ultralife Corporation's Growth

Over the last three years, Ultralife Corporation has shrunk its earnings per share by 16% per year. In the last year, its revenue is down 5.1%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Ultralife Corporation Been A Good Investment?

Given the total shareholder loss of 18% over three years, many shareholders in Ultralife Corporation are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Ultralife that investors should look into moving forward.

Switching gears from Ultralife, 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. 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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