Despite Eagle Bulk Shipping Inc.'s (NASDAQ:EGLE) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 18 June 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
Comparing Eagle Bulk Shipping Inc.'s CEO Compensation With the industry
According to our data, Eagle Bulk Shipping Inc. has a market capitalization of US$606m, and paid its CEO total annual compensation worth US$1.7m over the year to December 2020. That's a notable decrease of 35% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$675k.
On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$562k. Hence, we can conclude that Gary Vogel is remunerated higher than the industry median. Moreover, Gary Vogel also holds US$8.2m worth of Eagle Bulk Shipping stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. Eagle Bulk Shipping pays out 40% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Eagle Bulk Shipping Inc.'s Growth
Over the last three years, Eagle Bulk Shipping Inc. has shrunk its earnings per share by 38% per year. Its revenue is up 2.8% over the last year.
Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Eagle Bulk Shipping Inc. Been A Good Investment?
Eagle Bulk Shipping Inc. has generated a total shareholder return of 21% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Eagle Bulk Shipping that investors should be aware of in a dynamic business environment.
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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