How Much Did Boxlight Corporation’s (NASDAQ:BOXL) CEO Pocket Last Year?
Leading Boxlight Corporation (NASDAQ:BOXL) as the CEO, James Elliott took the company to a valuation of US$37.86M. Recognizing whether CEO incentives are aligned with shareholders is a crucial part of investing. Incentives can be in the form of compensation, which should always be structured in a way that promotes value-creation to shareholders. I will break down Elliott’s pay and compare this to the company’s performance over the same period, as well as measure it against other US CEOs leading companies of similar size and profitability. Check out our latest analysis for Boxlight
What has been the trend in BOXL’s earnings?
Earnings is a powerful indication of BOXL’s ability to invest shareholders’ funds and generate returns. Therefore I will use earnings as a proxy of Elliott’s performance in the past year. In the past year, BOXL released negative earnings of -US$3.62M , which is a further decline from prior year’s loss of -US$1.48M. Furthermore, on average, BOXL has been loss-making in the past, with a 5-year average EPS of -US$0.62. During times of unprofitability the company may be incurring a period of reinvestment and growth, or it can be a sign of some headwind. In any case, CEO compensation should represent the current condition of the business. In the latest financial statments, Elliott’s total remuneration increased over two-fold, reaching US$125.00K , but off a low base. Although I couldn’t find information on the composition of Elliott’s pay, if some portion were non-cash items such as stocks and options, then fluxes in BOXL’s share price can affect the real level of what the CEO actually receives.
Is BOXL overpaying the CEO?
Even though there is no cookie-cutter approach, as compensation should be tailored to the specific company and market, we can evaluate a high-level base line to see if BOXL deviates substantially from its peers. This outcome helps investors ask the right question about Elliott’s incentive alignment. On average, a US small-cap is worth around $1B, generates earnings of $96M, and remunerates its CEO circa $2.7M annually. Usually I’d use market cap and profit as factors determining performance, however, BOXL’s negative earnings reduces the usefulness of my formula. Analyzing the range of remuneration for small-cap executives, it seems like Elliott is paid aptly compared to those in similar-sized companies. Overall, although BOXL is loss-making, it seems like the CEO’s pay is fair.
Next Steps:
In the upcoming year’s AGM, shareholders should think about whether another increase in CEO pay is justified, should the board propose an executive pay raise. Will this raise take Elliott’s pay beyond the bound of reasonableness, or will it help in retaining the talented executive? Being proactive in governance decisions is a key part to investing, and collectively, investors can make a big difference. If you have not done so already, I urge you to complete your research by taking a look at the following:
Governance: To find out more about BOXL’s governance, look through our infographic report of the company’s board and management.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BOXL? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
