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

Key Insights

• DatChat to hold its Annual General Meeting on 6th of August
• Salary of US$450.0k is part of CEO Darin Myman's total remuneration
• The total compensation is 34% higher than the average for the industry
• DatChat's EPS grew by 54% over the past three years while total shareholder loss over the past three years was 79%

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In the past three years, the share price of DatChat, Inc. (NASDAQ:DATS) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 6th of August could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for DatChat

How Does Total Compensation For Darin Myman Compare With Other Companies In The Industry?

At the time of writing, our data shows that DatChat, Inc. has a market capitalization of US$12m, and reported total annual CEO compensation of US$750k for the year to December 2024. This was the same as last year. In particular, the salary of US$450.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

For comparison, other companies in the American Software industry with market capitalizations below US$200m, reported a median total CEO compensation of US$558k. Accordingly, our analysis reveals that DatChat, Inc. pays Darin Myman north of the industry median. Moreover, Darin Myman also holds US$420k worth of DatChat stock directly under their own name.

On an industry level, roughly 10% of total compensation represents salary and 90% is other remuneration. According to our research, DatChat has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at DatChat, Inc.'s Growth Numbers

DatChat, Inc.'s earnings per share (EPS) grew 54% per year over the last three years. It saw its revenue drop 40% 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. 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 DatChat, Inc. Been A Good Investment?

Few DatChat, Inc. shareholders would feel satisfied with the return of -79% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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. In our study, we found 4 warning signs for DatChat you should be aware of, and 3 of them can't be ignored.

Important note: DatChat 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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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.