Yahoo Finance Should Shareholders Have Second Thoughts About A Pay Rise For Socket Mobile, Inc.'s (NASDAQ:SCKT) CEO This Year?
Key Insights
Socket Mobile's Annual General Meeting to take place on 15th of May
CEO Kevin Mills' total compensation includes salary of US$300.0k
Total compensation is 46% below industry average
Over the past three years, Socket Mobile's EPS fell by 60% and over the past three years, the total loss to shareholders 76%
Performance at Socket Mobile, Inc. (NASDAQ:SCKT) has not been particularly rosy recently and shareholders will likely be holding CEO Kevin Mills and the board accountable for this. At the upcoming AGM on 15th of May, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. We think most shareholders will probably pass the CEO compensation, based on what we gathered.
Check out our latest analysis for Socket Mobile
Comparing Socket Mobile, Inc.'s CEO Compensation With The Industry
At the time of writing, our data shows that Socket Mobile, Inc. has a market capitalization of US$9.4m, and reported total annual CEO compensation of US$364k for the year to December 2023. We note that's a decrease of 22% compared to last year. In particular, the salary of US$300.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the American Tech industry with market capitalizations below US$200m, reported a median total CEO compensation of US$677k. That is to say, Kevin Mills is paid under the industry median. What's more, Kevin Mills holds US$307k worth of shares in the company in their own name.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$300k | US$294k | 82% |
Other | US$64k | US$171k | 18% |
Total Compensation | US$364k | US$465k | 100% |
On an industry level, around 32% of total compensation represents salary and 68% is other remuneration. Socket Mobile pays out 82% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Socket Mobile, Inc.'s Growth
Over the last three years, Socket Mobile, Inc. has shrunk its earnings per share by 60% per year. It saw its revenue drop 8.1% 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 Socket Mobile, Inc. Been A Good Investment?
Few Socket Mobile, Inc. shareholders would feel satisfied with the return of -76% over three years. So shareholders would probably want the company to be less generous with CEO compensation.
To Conclude...
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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Socket Mobile you should be aware of, and 2 of them shouldn't be ignored.
Important note: Socket Mobile 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.
