United-Guardian, Inc. (NASDAQ:UG) has not performed well recently and CEO Ken Globus will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 18 May 2021. 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.
Comparing United-Guardian, Inc.'s CEO Compensation With the industry
According to our data, United-Guardian, Inc. has a market capitalization of US$68m, and paid its CEO total annual compensation worth US$441k over the year to December 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is US$280.5k, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$227k. Hence, we can conclude that Ken Globus is remunerated higher than the industry median. Moreover, Ken Globus also holds US$20m worth of United-Guardian stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 58% of total compensation out of all the companies we analyzed, while other remuneration made up 42% of the pie. According to our research, United-Guardian has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
United-Guardian, Inc.'s Growth
Over the last three years, United-Guardian, Inc. has shrunk its earnings per share by 4.9% per year. In the last year, its revenue is down 19%.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has United-Guardian, Inc. Been A Good Investment?
Since shareholders would have lost about 6.4% over three years, some United-Guardian, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. 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.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for United-Guardian that investors should think about before committing capital to this stock.
Switching gears from United-Guardian, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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