This Is Why Polar Power, Inc.'s (NASDAQ:POLA) CEO Compensation Looks Appropriate
Key Insights
Polar Power will host its Annual General Meeting on 20th of December
Salary of US$275.0k is part of CEO Arthur Sams's total remuneration
The overall pay is 50% below the industry average
Polar Power's three-year loss to shareholders was 91% while its EPS grew by 51% over the past three years
Performance at Polar Power, Inc. (NASDAQ:POLA) has been rather uninspiring recently and shareholders may be wondering how CEO Arthur Sams plans to fix this. At the next AGM coming up on 20th of December, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.
View our latest analysis for Polar Power
How Does Total Compensation For Arthur Sams Compare With Other Companies In The Industry?
According to our data, Polar Power, Inc. has a market capitalization of US$7.2m, and paid its CEO total annual compensation worth US$330k over the year to December 2022. That's a notable increase of 20% on last year. We note that the salary portion, which stands at US$275.0k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the American Electrical industry with market capitalizations below US$200m, reported a median total CEO compensation of US$664k. This suggests that Arthur Sams is paid below the industry median. What's more, Arthur Sams holds US$2.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2022 | 2021 | Proportion (2022) |
Salary | US$275k | US$275k | 83% |
Other | US$55k | - | 17% |
Total Compensation | US$330k | US$275k | 100% |
On an industry level, roughly 21% of total compensation represents salary and 79% is other remuneration. It's interesting to note that Polar Power pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Polar Power, Inc.'s Growth
Polar Power, Inc. has seen its earnings per share (EPS) increase by 51% a year over the past three years. In the last year, its revenue is up 26%.
This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Polar Power, Inc. Been A Good Investment?
Few Polar Power, Inc. shareholders would feel satisfied with the return of -91% over three years. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key question may be why the fundamentals have not yet been reflected into the share price. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 4 warning signs for Polar Power (2 don't sit too well with us!) that you should be aware of before investing here.
Important note: Polar Power 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.
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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.
