It Looks Like Universal Electronics Inc.'s (NASDAQ:UEIC) CEO May Expect Their Salary To Be Put Under The Microscope

Key Insights

• Universal Electronics will host its Annual General Meeting on 11th of June
• CEO Paul Arling's total compensation includes salary of US$830.0k
• Total compensation is 490% above industry average
• Universal Electronics' three-year loss to shareholders was 77% while its EPS was down 116% over the past three years

The results at Universal Electronics Inc. (NASDAQ:UEIC) have been quite disappointing recently and CEO Paul Arling bears some responsibility for this. At the upcoming AGM on 11th of June, 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.

Check out our latest analysis for Universal Electronics

How Does Total Compensation For Paul Arling Compare With Other Companies In The Industry?

Our data indicates that Universal Electronics Inc. has a market capitalization of US$147m, and total annual CEO compensation was reported as US$3.7m for the year to December 2023. Notably, that's an increase of 24% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$830k.

In comparison with other companies in the American Consumer Durables industry with market capitalizations under US$200m, the reported median total CEO compensation was US$620k. Hence, we can conclude that Paul Arling is remunerated higher than the industry median. Furthermore, Paul Arling directly owns US$3.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$830k	US$830k	23%
Other	US$2.8m	US$2.1m	77%
Total Compensation	US$3.7m	US$3.0m	100%

On an industry level, around 18% of total compensation represents salary and 82% is other remuneration. It's interesting to note that Universal Electronics pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Universal Electronics Inc.'s Growth Numbers

Universal Electronics Inc. has reduced its earnings per share by 116% a year over the last three years. It saw its revenue drop 22% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Universal Electronics Inc. Been A Good Investment?

Few Universal Electronics Inc. shareholders would feel satisfied with the return of -77% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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 one thing, but it is also interesting to check if the CEO is buying or selling Universal Electronics (free visualization of insider trades).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.