Euronet Worldwide, Inc. (NASDAQ:EEFT) 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 18 May 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.
How Does Total Compensation For Mike Brown Compare With Other Companies In The Industry?
At the time of writing, our data shows that Euronet Worldwide, Inc. has a market capitalization of US$7.5b, and reported total annual CEO compensation of US$11m for the year to December 2020. That's a notable increase of 25% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$850k.
For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$6.6m. Accordingly, our analysis reveals that Euronet Worldwide, Inc. pays Mike Brown north of the industry median. What's more, Mike Brown holds US$258m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. It's interesting to note that Euronet Worldwide allocates a smaller portion of compensation to salary 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.
Euronet Worldwide, Inc.'s Growth
Over the last three years, Euronet Worldwide, Inc. has shrunk its earnings per share by 29% per year. Its revenue is down 7.4% over the previous 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. 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 Euronet Worldwide, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Euronet Worldwide, Inc. for providing a total return of 71% over three years. 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.
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. 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've identified 1 warning sign for Euronet Worldwide that investors should be aware of in a dynamic business environment.
Important note: Euronet Worldwide is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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