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

By
Simply Wall St
Published
June 02, 2021
NasdaqCM:UFPT
Source: Shutterstock

Performance at UFP Technologies, Inc. (NASDAQ:UFPT) has been reasonably good and CEO R. Bailly has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 09 June 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still want to keep CEO compensation within reason.

View our latest analysis for UFP Technologies

How Does Total Compensation For R. Bailly Compare With Other Companies In The Industry?

According to our data, UFP Technologies, Inc. has a market capitalization of US$423m, and paid its CEO total annual compensation worth US$1.7m over the year to December 2020. Notably, that's a decrease of 28% over the year before. 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 from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$614k. Accordingly, our analysis reveals that UFP Technologies, Inc. pays R. Bailly north of the industry median. What's more, R. Bailly holds US$24m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$600k US$580k 36%
Other US$1.1m US$1.7m 64%
Total CompensationUS$1.7m US$2.3m100%

On an industry level, around 13% of total compensation represents salary and 87% is other remuneration. UFP Technologies is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NasdaqCM:UFPT CEO Compensation June 3rd 2021

UFP Technologies, Inc.'s Growth

UFP Technologies, Inc.'s earnings per share (EPS) grew 14% per year over the last three years. It saw its revenue drop 9.9% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has UFP Technologies, Inc. Been A Good Investment?

Boasting a total shareholder return of 79% over three years, UFP Technologies, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for UFP Technologies that investors should look into moving forward.

Important note: UFP Technologies 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.

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