Shareholders Will Probably Not Have Any Issues With MMTec, Inc.'s (NASDAQ:MTC) CEO Compensation
Key Insights
MMTec to hold its Annual General Meeting on 10th of November
Total pay for CEO Xiangdong Wen includes US$305.1k salary
The overall pay is 81% below the industry average
MMTec's three-year loss to shareholders was 90% while its EPS was down 27% over the past three years
The performance at MMTec, Inc. (NASDAQ:MTC) has been rather lacklustre of late and shareholders may be wondering what CEO Xiangdong Wen is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 10th of November. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.
See our latest analysis for MMTec
Comparing MMTec, Inc.'s CEO Compensation With The Industry
At the time of writing, our data shows that MMTec, Inc. has a market capitalization of US$205m, and reported total annual CEO compensation of US$314k for the year to December 2022. We note that's an increase of 81% above last year. Notably, the salary which is US$305.1k, represents most of the total compensation being paid.
For comparison, other companies in the American Software industry with market capitalizations ranging between US$100m and US$400m had a median total CEO compensation of US$1.7m. Accordingly, MMTec pays its CEO under the industry median. What's more, Xiangdong Wen holds US$313k worth of shares in the company in their own name.
Component | 2022 | 2021 | Proportion (2022) |
Salary | US$305k | US$171k | 97% |
Other | US$9.0k | US$2.6k | 3% |
Total Compensation | US$314k | US$173k | 100% |
On an industry level, roughly 11% of total compensation represents salary and 89% is other remuneration. MMTec has gone down a largely traditional route, paying Xiangdong Wen a high salary, giving it preference over non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
MMTec, Inc.'s Growth
Over the last three years, MMTec, Inc. has shrunk its earnings per share by 27% per year. In the last year, its revenue is up 68%.
The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 MMTec, Inc. Been A Good Investment?
With a total shareholder return of -90% over three years, MMTec, Inc. shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
Xiangdong receives almost all of their compensation through a salary. The fact that shareholders have earned a negative share price return is certainly disconcerting. The fact that earnings growth has gone backwards could be a factor for the downward trend in the share price. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 3 which can't be ignored) in MMTec we think you should know about.
Switching gears from MMTec, 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.
