Shareholders Will Probably Hold Off On Increasing Marin Software Incorporated's (NASDAQ:MRIN) CEO Compensation For The Time Being

Shareholders of Marin Software Incorporated (NASDAQ:MRIN) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 02 June 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Marin Software

How Does Total Compensation For Chris Lien Compare With Other Companies In The Industry?

At the time of writing, our data shows that Marin Software Incorporated has a market capitalization of US$17m, and reported total annual CEO compensation of US$600k for the year to December 2020. We note that's a decrease of 30% compared to last year. Notably, the salary which is US$370.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$389k. Hence, we can conclude that Chris Lien is remunerated higher than the industry median. Furthermore, Chris Lien directly owns US$408k worth of shares in the company.

Component	2020	2019	Proportion (2020)
Salary	US$370k	US$400k	62%
Other	US$230k	US$456k	38%
Total Compensation	US$600k	US$856k	100%

On an industry level, around 11% of total compensation represents salary and 89% is other remuneration. Marin Software is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Marin Software Incorporated's Growth Numbers

Over the past three years, Marin Software Incorporated has seen its earnings per share (EPS) grow by 55% per year. In the last year, its revenue is down 38%.

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. 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 Marin Software Incorporated Been A Good Investment?

With a total shareholder return of -73% over three years, Marin Software Incorporated shareholders would by and large be disappointed. 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 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. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Marin Software (1 is significant!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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