We Think Sonic Foundry, Inc.'s (NASDAQ:SOFO) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Sonic Foundry's Annual General Meeting to take place on 10th of March

• CEO Joe Mozden's total compensation includes salary of US$311.5k

• The total compensation is 67% higher than the average for the industry

• Over the past three years, Sonic Foundry's EPS fell by 50% and over the past three years, the total loss to shareholders 60%

Sonic Foundry, Inc. (NASDAQ:SOFO) has not performed well recently and CEO Joe Mozden will probably need to up their game. At the upcoming AGM on 10th of March, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Sonic Foundry

How Does Total Compensation For Joe Mozden Compare With Other Companies In The Industry?

According to our data, Sonic Foundry, Inc. has a market capitalization of US$12m, and paid its CEO total annual compensation worth US$976k over the year to September 2022. We note that's an increase of 28% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$312k.

On comparing similar-sized companies in the American Software industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$584k. This suggests that Joe Mozden is paid more than the median for the industry.

On an industry level, around 9% of total compensation represents salary and 91% is other remuneration. Sonic Foundry is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Sonic Foundry, Inc.'s Growth

Sonic Foundry, Inc. has reduced its earnings per share by 50% a year over the last three years. In the last year, its revenue is down 24%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Sonic Foundry, Inc. Been A Good Investment?

With a total shareholder return of -60% over three years, Sonic Foundry, Inc. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

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.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Sonic Foundry that you should be aware of before investing.

Important note: Sonic Foundry 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.

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

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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