We Think Some Shareholders May Hesitate To Increase Precipio, Inc.'s (NASDAQ:PRPO) CEO Compensation

In the past three years, the share price of Precipio, Inc. (NASDAQ:PRPO) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 18 June 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Precipio

Comparing Precipio, Inc.'s CEO Compensation With the industry

Our data indicates that Precipio, Inc. has a market capitalization of US$87m, and total annual CEO compensation was reported as US$452k for the year to December 2020. Notably, that's an increase of 52% over the year before. We note that the salary of US$261.2k makes up a sizeable portion of the total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$381k. So it looks like Precipio compensates Ilan Danieli in line with the median for the industry. Furthermore, Ilan Danieli directly owns US$86k worth of shares in the company.

Component	2020	2019	Proportion (2020)
Salary	US$261k	US$250k	58%
Other	US$191k	US$48k	42%
Total Compensation	US$452k	US$298k	100%

On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. Precipio is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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 124% a year over the past three years. In the last year, its revenue is up 85%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Precipio, Inc. Been A Good Investment?

The return of -47% over three years would not have pleased Precipio, Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 5 warning signs for Precipio (of which 2 make us uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

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. 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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