Shareholders May Not Be So Generous With Information Services Group, Inc.'s (NASDAQ:III) CEO Compensation And Here's Why

Key Insights

• Information Services Group will host its Annual General Meeting on 25th of April
• Total pay for CEO Mike Connors includes US$900.0k salary
• The total compensation is 123% higher than the average for the industry
• Over the past three years, Information Services Group's EPS grew by 30% and over the past three years, the total loss to shareholders 9.5%

In the past three years, shareholders of Information Services Group, Inc. (NASDAQ:III) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 25th of April could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Information Services Group

How Does Total Compensation For Mike Connors Compare With Other Companies In The Industry?

According to our data, Information Services Group, Inc. has a market capitalization of US$176m, and paid its CEO total annual compensation worth US$2.9m over the year to December 2023. Notably, that's a decrease of 29% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$900k.

For comparison, other companies in the American IT industry with market capitalizations ranging between US$100m and US$400m had a median total CEO compensation of US$1.3m. Accordingly, our analysis reveals that Information Services Group, Inc. pays Mike Connors north of the industry median. Moreover, Mike Connors also holds US$17m worth of Information Services Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$900k	US$888k	31%
Other	US$2.0m	US$3.3m	69%
Total Compensation	US$2.9m	US$4.2m	100%

Speaking on an industry level, nearly 31% of total compensation represents salary, while the remainder of 69% is other remuneration. Although there is a difference in how total compensation is set, Information Services Group more or less reflects the market in terms of setting the salary. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Information Services Group, Inc.'s Growth

Information Services Group, Inc. has seen its earnings per share (EPS) increase by 30% a year over the past three years. It achieved revenue growth of 1.7% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Information Services Group, Inc. Been A Good Investment?

With a three year total loss of 9.5% for the shareholders, Information Services Group, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. 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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 2 which are a bit unpleasant) in Information Services Group we think you should know about.

Important note: Information Services Group 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.