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Ultralife Corporation (NASDAQ:ULBI) has not performed well recently and CEO Mike Popielec will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 21 July 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.
Comparing Ultralife Corporation's CEO Compensation With the industry
According to our data, Ultralife Corporation has a market capitalization of US$134m, and paid its CEO total annual compensation worth US$737k over the year to December 2020. That's a notable decrease of 9.2% on last year. In particular, the salary of US$531.8k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$702k. From this we gather that Mike Popielec is paid around the median for CEOs in the industry. Furthermore, Mike Popielec directly owns US$2.5m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. Ultralife pays out 72% of remuneration in the form of a salary, significantly higher than the industry average. 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.
Ultralife Corporation's Growth
Over the last three years, Ultralife Corporation has shrunk its earnings per share by 16% per year. Its revenue is down 5.1% over the previous year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Ultralife Corporation Been A Good Investment?
Since shareholders would have lost about 18% over three years, some Ultralife Corporation investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Ultralife that investors should think about before committing capital to this stock.
Important note: Ultralife 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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