Shareholders May Not Be So Generous With ScanSource, Inc.'s (NASDAQ:SCSC) CEO Compensation And Here's Why
Shareholders of ScanSource, Inc. (NASDAQ:SCSC) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 27 January 2022. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
See our latest analysis for ScanSource
How Does Total Compensation For Mike Baur Compare With Other Companies In The Industry?
At the time of writing, our data shows that ScanSource, Inc. has a market capitalization of US$818m, and reported total annual CEO compensation of US$6.6m for the year to June 2021. Notably, that's an increase of 93% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$766k.
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$2.4m. Hence, we can conclude that Mike Baur is remunerated higher than the industry median. Furthermore, Mike Baur directly owns US$161k worth of shares in the company.
Component | 2021 | 2020 | Proportion (2021) |
Salary | US$766k | US$875k | 12% |
Other | US$5.9m | US$2.6m | 88% |
Total Compensation | US$6.6m | US$3.4m | 100% |
Talking in terms of the industry, salary represented approximately 29% of total compensation out of all the companies we analyzed, while other remuneration made up 71% of the pie. In ScanSource's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at ScanSource, Inc.'s Growth Numbers
ScanSource, Inc. has seen its earnings per share (EPS) increase by 16% a year over the past three years. It achieved revenue growth of 9.7% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 ScanSource, Inc. Been A Good Investment?
Given the total shareholder loss of 16% over three years, many shareholders in ScanSource, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
So you may want to check if insiders are buying ScanSource shares with their own money (free access).
Switching gears from ScanSource, 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.
