Shareholders may be wondering what CEO Elliot Noss plans to do to improve the less than great performance at Tucows Inc. (NASDAQ:TCX) recently. At the next AGM coming up on 07 September 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.
Comparing Tucows Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Tucows Inc. has a market capitalization of US$791m, and reported total annual CEO compensation of US$662k for the year to December 2020. Notably, that's an increase of 23% over the year before. In particular, the salary of US$359.1k, makes up a fairly large portion of the total compensation being paid to the CEO.
On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$1.6m. This suggests that Elliot Noss is paid below the industry median. What's more, Elliot Noss holds US$52m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 18% of total compensation represents salary and 82% is other remuneration. Tucows is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Tucows Inc.'s Growth
Over the last three years, Tucows Inc. has shrunk its earnings per share by 33% per year. In the last year, its revenue is down 14%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Tucows Inc. Been A Good Investment?
With a total shareholder return of 28% over three years, Tucows Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
Shareholder returns while positive, need to be looked at along with earnings, which have failed to grow and this could mean that the current momentum may not continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 5 warning signs for Tucows you should be aware of, and 1 of them is potentially serious.
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.
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