Increases to CEO Compensation Might Be Put On Hold For Now at Upwork Inc. (NASDAQ:UPWK)

Key Insights

• Upwork to hold its Annual General Meeting on 7th of June
• Salary of US$570.0k is part of CEO Hayden Brown's total remuneration
• The total compensation is 67% higher than the average for the industry
• Upwork's EPS grew by 47% over the past three years while total shareholder loss over the past three years was 77%

In the past three years, the share price of Upwork Inc. (NASDAQ:UPWK) 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. These are some of the concerns that shareholders may want to bring up at the next AGM held on 7th of June. 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.

See our latest analysis for Upwork

Comparing Upwork Inc.'s CEO Compensation With The Industry

According to our data, Upwork Inc. has a market capitalization of US$1.4b, and paid its CEO total annual compensation worth US$9.5m over the year to December 2023. That's a notable increase of 12% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$570k.

For comparison, other companies in the American Professional Services industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$5.7m. Hence, we can conclude that Hayden Brown is remunerated higher than the industry median. What's more, Hayden Brown holds US$12m 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$570k	US$550k	6%
Other	US$8.9m	US$7.9m	94%
Total Compensation	US$9.5m	US$8.5m	100%

On an industry level, around 13% of total compensation represents salary and 87% is other remuneration. Upwork sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Upwork Inc.'s Growth Numbers

Over the past three years, Upwork Inc. has seen its earnings per share (EPS) grow by 47% per year. It achieved revenue growth of 13% over the 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 decent revenue growth in the last year, suggesting the business is healthy and growing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Upwork Inc. Been A Good Investment?

With a total shareholder return of -77% over three years, Upwork Inc. shareholders would by and large be disappointed. 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 on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At 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 will likely improve performance in the future.

So you may want to check if insiders are buying Upwork shares with their own money (free access).

Important note: Upwork 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. 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.