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In the past three years, the share price of Synex International Inc. (TSE:SXI) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 25 November 2021. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
Comparing Synex International Inc.'s CEO Compensation With the industry
According to our data, Synex International Inc. has a market capitalization of CA$12m, and paid its CEO total annual compensation worth CA$236k over the year to June 2021. That's a notable increase of 8.9% on last year. In particular, the salary of CA$208.0k, 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 CA$252m, the reported median total CEO compensation was CA$236k. From this we gather that Daniel Russell is paid around the median for CEOs in the industry. Moreover, Daniel Russell also holds CA$1.5m worth of Synex International stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 41% of total compensation represents salary and 59% is other remuneration. Synex International is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Synex International Inc.'s Growth
Synex International Inc.'s earnings per share (EPS) grew 40% per year over the last three years. In the last year, its revenue is up 7.5%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Synex International Inc. Been A Good Investment?
Since shareholders would have lost about 28% over three years, some Synex International Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
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 did our research and identified 3 warning signs (and 2 which are potentially serious) in Synex International we think you should know about.
Important note: Synex International 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.
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