This Is Why Shareholders Will Hold Back On A Pay Rise For UWM Holdings Corporation's (NYSE:UWMC) CEO This Year

Key Insights

• UWM Holdings' Annual General Meeting to take place on 4th of June
• Total pay for CEO Mat Ishbia includes US$600.0k salary
• The total compensation is similar to the average for the industry
• Over the past three years, UWM Holdings' EPS fell by 87% and over the past three years, the total shareholder return was 4.8%

Performance at UWM Holdings Corporation (NYSE:UWMC) has been reasonably good and CEO Mat Ishbia has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 4th of June, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Here is our take on why we think the CEO compensation looks appropriate.

View our latest analysis for UWM Holdings

How Does Total Compensation For Mat Ishbia Compare With Other Companies In The Industry?

According to our data, UWM Holdings Corporation has a market capitalization of US$12b, and paid its CEO total annual compensation worth US$12m over the year to December 2023. We note that's an increase of 74% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$600k.

On comparing similar companies in the American Diversified Financial industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$12m. From this we gather that Mat Ishbia is paid around the median for CEOs in the industry. What's more, Mat Ishbia holds US$1.3m worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	US$600k	US$600k	5%
Other	US$12m	US$6.4m	95%
Total Compensation	US$12m	US$7.0m	100%

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but UWM Holdings paid Mat Ishbia a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

UWM Holdings Corporation's Growth

UWM Holdings Corporation has reduced its earnings per share by 87% a year over the last three years. In the last year, its revenue is up 16%.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has UWM Holdings Corporation Been A Good Investment?

With a total shareholder return of 4.8% over three years, UWM Holdings Corporation has done okay by shareholders, but there's always room for improvement. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

UWM Holdings primarily uses non-salary benefits to reward its CEO. Although the company has performed relatively well, we still think there are some areas that could be improved. We reckon that there are some shareholders who may be hesitant to increase CEO pay further until EPS growth starts to improve, despite the robust revenue growth.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for UWM Holdings that investors should think about before committing capital to this stock.

Important note: UWM 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.