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Here's Why Tucows Inc.'s (NASDAQ:TCX) CEO Compensation Is The Least Of Shareholders Concerns

Shareholders may be wondering what CEO Elliot Noss plans to do to improve the less than great performance at Tucows Inc. (NASDAQ:TCX) recently. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 07 September 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.

Check out our latest analysis for Tucows

Comparing Tucows Inc.'s CEO Compensation With the industry

Our data indicates that Tucows Inc. has a market capitalization of US$791m, and total annual CEO compensation was reported as US$662k for the year to December 2020. Notably, that's an increase of 23% over the year before. Notably, the salary which is US$359.1k, represents a considerable chunk of the total compensation being paid.

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On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$1.6m. That is to say, Elliot Noss is paid under the industry median. What's more, Elliot Noss holds US$52m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

US$359k

US$322k

54%

Other

US$303k

US$215k

46%

Total Compensation

US$662k

US$537k

100%

On an industry level, around 18% of total compensation represents salary and 82% is other remuneration. Tucows is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ceo-compensation

Tucows Inc.'s Growth

Over the last three years, Tucows Inc. has shrunk its earnings per share by 33% per year. In the last year, its revenue is down 14%.

Few shareholders would be pleased to read that EPS have declined. 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Tucows Inc. Been A Good Investment?

With a total shareholder return of 28% over three years, Tucows Inc. shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

Shareholder returns while positive, need to be looked at along with earnings, which have failed to grow and this could mean that the current momentum may not continue. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 5 warning signs (and 1 which is a bit concerning) in Tucows we think you should know about.

Important note: Tucows 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.