Shareholders May Not Be So Generous With Urban One, Inc.'s (NASDAQ:UONE.K) CEO Compensation And Here's Why

The share price of Urban One, Inc. (NASDAQ:UONE.K) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 23 June 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Urban One

Comparing Urban One, Inc.'s CEO Compensation With the industry

Our data indicates that Urban One, Inc. has a market capitalization of US$359m, and total annual CEO compensation was reported as US$6.7m for the year to December 2020. That's a fairly small increase of 4.2% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

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$2.2m. This suggests that Alfred Liggins is paid more than the median for the industry. Furthermore, Alfred Liggins directly owns US$84m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$1.1m	US$1.3m	16%
Other	US$5.6m	US$5.2m	84%
Total Compensation	US$6.7m	US$6.4m	100%

Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. In Urban One's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Urban One, Inc.'s Growth

Over the last three years, Urban One, Inc. has shrunk its earnings per share by 45% per year. It saw its revenue drop 14% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Urban One, Inc. Been A Good Investment?

Boasting a total shareholder return of 137% over three years, Urban One, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 5 warning signs for Urban One (1 is concerning!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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