Shareholders Will Most Likely Find ADDvantage Technologies Group, Inc.'s (NASDAQ:AEY) CEO Compensation Acceptable
ADDvantage Technologies Group, Inc. (NASDAQ:AEY) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 15 September 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
See our latest analysis for ADDvantage Technologies Group
How Does Total Compensation For Joe Hart Compare With Other Companies In The Industry?
Our data indicates that ADDvantage Technologies Group, Inc. has a market capitalization of US$32m, and total annual CEO compensation was reported as US$509k for the year to September 2020. We note that's an increase of 22% above last year. We note that the salary of US$290.8k makes up a sizeable portion of the total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$444k. So it looks like ADDvantage Technologies Group compensates Joe Hart in line with the median for the industry. Furthermore, Joe Hart directly owns US$492k worth of shares in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$291k | US$304k | 57% |
Other | US$218k | US$112k | 43% |
Total Compensation | US$509k | US$416k | 100% |
On an industry level, around 29% of total compensation represents salary and 71% is other remuneration. According to our research, ADDvantage Technologies Group has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at ADDvantage Technologies Group, Inc.'s Growth Numbers
ADDvantage Technologies Group, Inc. has reduced its earnings per share by 31% a year over the last three years. It saw its revenue drop 2.0% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has ADDvantage Technologies Group, Inc. Been A Good Investment?
We think that the total shareholder return of 76%, over three years, would leave most ADDvantage Technologies Group, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for ADDvantage Technologies Group (2 are a bit concerning!) that you should be aware of before investing here.
Switching gears from ADDvantage Technologies Group, 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. 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.
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