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The share price of Shenandoah Telecommunications Company (NASDAQ:SHEN) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 20 April 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. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.
Comparing Shenandoah Telecommunications Company's CEO Compensation With the industry
According to our data, Shenandoah Telecommunications Company has a market capitalization of US$2.4b, and paid its CEO total annual compensation worth US$2.9m over the year to December 2020. Notably, that's an increase of 14% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$715k.
On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$3.3m. So it looks like Shenandoah Telecommunications compensates Chris French in line with the median for the industry. What's more, Chris French holds US$90m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 26% of total compensation out of all the companies we analyzed, while other remuneration made up 74% of the pie. Our data reveals that Shenandoah Telecommunications allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Shenandoah Telecommunications Company's Growth
Over the last three years, Shenandoah Telecommunications Company has shrunk its earnings per share by 66% per year. Its revenue is up 4.4% over the last year.
Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Shenandoah Telecommunications Company Been A Good Investment?
Shenandoah Telecommunications Company has generated a total shareholder return of 33% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question 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.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Shenandoah Telecommunications that investors should look into moving forward.
Switching gears from Shenandoah Telecommunications, 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.
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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