Here's Why Shareholders May Want To Be Cautious With Increasing Eckoh plc's (LON:ECK) CEO Pay Packet

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Simply Wall St

Wed, Sep 6, 2023, 11:05 PM 4 min read

Key Insights

Eckoh's Annual General Meeting to take place on 13th of September
CEO Nik Philpot's total compensation includes salary of UK£339.0k
The overall pay is 35% above the industry average
Eckoh's EPS grew by 9.2% over the past three years while total shareholder loss over the past three years was 21%

The underwhelming share price performance of Eckoh plc (LON:ECK) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 13th of September. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Eckoh

How Does Total Compensation For Nik Philpot Compare With Other Companies In The Industry?

At the time of writing, our data shows that Eckoh plc has a market capitalization of UK£130m, and reported total annual CEO compensation of UK£453k for the year to March 2023. That's a notable increase of 16% on last year. Notably, the salary which is UK£339.0k, represents most of the total compensation being paid.

On examining similar-sized companies in the British IT industry with market capitalizations between UK£80m and UK£320m, we discovered that the median CEO total compensation of that group was UK£335k. Hence, we can conclude that Nik Philpot is remunerated higher than the industry median. Furthermore, Nik Philpot directly owns UK£3.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	UK£339k	UK£326k	75%
Other	UK£114k	UK£65k	25%
Total Compensation	UK£453k	UK£391k	100%

Talking in terms of the industry, salary represented approximately 75% of total compensation out of all the companies we analyzed, while other remuneration made up 25% of the pie. Our data reveals that Eckoh allocates salary more or less in line with the wider market. 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.

ceo-compensation — AIM:ECK CEO Compensation September 7th 2023

Eckoh plc's Growth

Over the past three years, Eckoh plc has seen its earnings per share (EPS) grow by 9.2% per year. It achieved revenue growth of 22% over the last year.

This revenue growth could really point to a brighter future. And the improvement in EPSis modest but respectable. Although we'll stop short of calling the stock a top performer, we think the company has potential. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Eckoh plc Been A Good Investment?

Given the total shareholder loss of 21% over three years, many shareholders in Eckoh plc are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. 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.

Shareholders may want to check for free if Eckoh insiders are buying or selling shares.

Switching gears from Eckoh, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.