Here's Why Shareholders May Want To Be Cautious With Increasing Precipio, Inc.'s (NASDAQ:PRPO) CEO Pay Packet

Key Insights

• Precipio will host its Annual General Meeting on 13th of June
• Total pay for CEO Ilan Danieli includes US$300.0k salary
• The overall pay is comparable to the industry average
• Precipio's three-year loss to shareholders was 93% while its EPS grew by 14% over the past three years

The underwhelming share price performance of Precipio, Inc. (NASDAQ:PRPO) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 13th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Precipio

Comparing Precipio, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Precipio, Inc. has a market capitalization of US$8.3m, and reported total annual CEO compensation of US$473k for the year to December 2023. Notably, that's a decrease of 41% over the year before. We note that the salary portion, which stands at US$300.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the American Healthcare industry with market capitalizations under US$200m, the reported median total CEO compensation was US$618k. This suggests that Precipio remunerates its CEO largely in line with the industry average.

Component	2023	2022	Proportion (2023)
Salary	US$300k	US$300k	63%
Other	US$173k	US$505k	37%
Total Compensation	US$473k	US$805k	100%

Talking in terms of the industry, salary represented approximately 21% of total compensation out of all the companies we analyzed, while other remuneration made up 79% of the pie. Precipio pays out 63% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Precipio, Inc.'s Growth

Precipio, Inc. has seen its earnings per share (EPS) increase by 14% a year over the past three years. It achieved revenue growth of 62% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Precipio, Inc. Been A Good Investment?

The return of -93% over three years would not have pleased Precipio, Inc. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Precipio (2 are potentially serious!) that you should be aware of before investing here.

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.