Key Insights

• Universal Electronics will host its Annual General Meeting on 11th of June
• CEO Paul Arling's total compensation includes salary of US$830.0k
• Total compensation is 490% above industry average
• Universal Electronics' three-year loss to shareholders was 77% while its EPS was down 116% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Universal Electronics Inc. (NASDAQ:UEIC) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 11th of June. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Comparing Universal Electronics Inc.'s CEO Compensation With The Industry

According to our data, Universal Electronics Inc. has a market capitalization of US$147m, and paid its CEO total annual compensation worth US$3.7m over the year to December 2023. Notably, that's an increase of 24% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$830k.

In comparison with other companies in the American Consumer Durables industry with market capitalizations under US$200m, the reported median total CEO compensation was US$620k. Accordingly, our analysis reveals that Universal Electronics Inc. pays Paul Arling north of the industry median. Furthermore, Paul Arling directly owns US$3.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 18% of total compensation out of all the companies we analyzed, while other remuneration made up 82% of the pie. Universal Electronics is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Universal Electronics Inc.'s Growth Numbers

Over the last three years, Universal Electronics Inc. has shrunk its earnings per share by 116% per year. It saw its revenue drop 22% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Universal Electronics Inc. Been A Good Investment?

The return of -77% over three years would not have pleased Universal Electronics Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

Whatever your view on compensation, you might want to check if insiders are buying or selling Universal Electronics shares (free trial).

Switching gears from Universal Electronics, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.