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

Key Insights

• Porch Group to hold its Annual General Meeting on 12th of June
• Salary of US$600.0k is part of CEO Matt Ehrlichman's total remuneration
• The overall pay is 184% above the industry average
• Porch Group's EPS grew by 3.0% over the past three years while total shareholder loss over the past three years was 90%

Shareholders of Porch Group, Inc. (NASDAQ:PRCH) 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 12th of June. 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 Porch Group

Comparing Porch Group, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Porch Group, Inc. has a market capitalization of US$190m, and reported total annual CEO compensation of US$4.3m for the year to December 2023. Notably, that's a decrease of 69% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$600k.

On comparing similar companies from the American Software industry with market caps ranging from US$100m to US$400m, we found that the median CEO total compensation was US$1.5m. Hence, we can conclude that Matt Ehrlichman is remunerated higher than the industry median. What's more, Matt Ehrlichman holds US$39m 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$600k	US$642k	14%
Other	US$3.7m	US$13m	86%
Total Compensation	US$4.3m	US$14m	100%

Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. Porch Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Porch Group, Inc.'s Growth Numbers

Porch Group, Inc. has seen its earnings per share (EPS) increase by 3.0% a year over the past three years. It achieved revenue growth of 53% over the last year.

It's hard to interpret the strong revenue growth as anything other than a positive. Combined with modest EPS growth, we get a good impression of the company. We'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. 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 Porch Group, Inc. Been A Good Investment?

The return of -90% over three years would not have pleased Porch Group, Inc. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. 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. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which is significant) in Porch Group we think you should know about.

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.