We Think Some Shareholders May Hesitate To Increase American Software, Inc.'s (NASDAQ:AMSW.A) CEO Compensation

Key Insights

• American Software to hold its Annual General Meeting on 20th of August
• CEO H. Dow's total compensation includes salary of US$741.0k
• The total compensation is similar to the average for the industry
• American Software's three-year loss to shareholders was 50% while its EPS grew by 5.4% over the past three years

The underwhelming share price performance of American Software, Inc. (NASDAQ:AMSW.A) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 20th of August. 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 American Software

How Does Total Compensation For H. Dow Compare With Other Companies In The Industry?

According to our data, American Software, Inc. has a market capitalization of US$331m, and paid its CEO total annual compensation worth US$1.9m over the year to April 2024. That's a notable decrease of 33% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$741k.

In comparison with other companies in the American Software industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$1.9m. This suggests that American Software remunerates its CEO largely in line with the industry average. What's more, H. Dow holds US$1.4m worth of shares in the company in their own name.

Component	2024	2023	Proportion (2024)
Salary	US$741k	US$741k	40%
Other	US$1.1m	US$2.0m	60%
Total Compensation	US$1.9m	US$2.8m	100%

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. According to our research, American Software has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

American Software, Inc.'s Growth

Over the past three years, American Software, Inc. has seen its earnings per share (EPS) grow by 5.4% per year. It saw its revenue drop 5.3% over the last year.

We would prefer it if there was revenue growth, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has American Software, Inc. Been A Good Investment?

Few American Software, Inc. shareholders would feel satisfied with the return of -50% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. 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.

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 3 warning signs for American Software (of which 2 are concerning!) that you should know about in order to have a holistic understanding of the stock.

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. 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.