We Discuss Why MIND C.T.I. Ltd's (NASDAQ:MNDO) CEO Compensation May Be Closely Reviewed

Key Insights

• MIND C.T.I will host its Annual General Meeting on 6th of May
• Total pay for CEO Eisinger Iancu includes US$240.0k salary
• The overall pay is comparable to the industry average
• Over the past three years, MIND C.T.I's EPS fell by 1.8% and over the past three years, the total loss to shareholders 14%

MIND C.T.I. Ltd (NASDAQ:MNDO) has not performed well recently and CEO Eisinger Iancu will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 6th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for MIND C.T.I

How Does Total Compensation For Eisinger Iancu Compare With Other Companies In The Industry?

At the time of writing, our data shows that MIND C.T.I. Ltd has a market capitalization of US$38m, and reported total annual CEO compensation of US$534k for the year to December 2023. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$240k.

For comparison, other companies in the American Software industry with market capitalizations below US$200m, reported a median total CEO compensation of US$534k. This suggests that MIND C.T.I remunerates its CEO largely in line with the industry average. What's more, Eisinger Iancu holds US$5.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$240k	US$240k	45%
Other	US$294k	US$298k	55%
Total Compensation	US$534k	US$538k	100%

Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. It's interesting to note that MIND C.T.I pays out a greater portion of remuneration through salary, compared to the industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at MIND C.T.I. Ltd's Growth Numbers

Over the last three years, MIND C.T.I. Ltd has shrunk its earnings per share by 1.8% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

The lack of EPS growth is certainly uninspiring. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has MIND C.T.I. Ltd Been A Good Investment?

Since shareholders would have lost about 14% over three years, some MIND C.T.I. Ltd investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which is significant) in MIND C.T.I we think you should know about.

Important note: MIND C.T.I 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.