Key Insights

• SoundThinking's Annual General Meeting to take place on 11th of June
• CEO Ralph Clark's total compensation includes salary of US$450.0k
• The total compensation is 214% higher than the average for the industry
• SoundThinking's EPS declined by 23% over the past three years while total shareholder loss over the past three years was 64%

Shareholders of SoundThinking, Inc. (NASDAQ:SSTI) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also lacking, despite revenue growth. The AGM coming up on 11th of June will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Comparing SoundThinking, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that SoundThinking, Inc. has a market capitalization of US$188m, and reported total annual CEO compensation of US$4.7m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at US$450k.

For comparison, other companies in the American Software industry with market capitalizations ranging between US$100m and US$400m had a median total CEO compensation of US$1.5m. Accordingly, our analysis reveals that SoundThinking, Inc. pays Ralph Clark north of the industry median. Moreover, Ralph Clark also holds US$5.5m worth of SoundThinking stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. In SoundThinking's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at SoundThinking, Inc.'s Growth Numbers

Over the last three years, SoundThinking, Inc. has shrunk its earnings per share by 23% per year. It achieved revenue growth of 21% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has SoundThinking, Inc. Been A Good Investment?

The return of -64% over three years would not have pleased SoundThinking, Inc. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. The upcoming AGM will provide shareholders the opportunity to revisit the company's remuneration policies and evaluate if the board's judgement and decision-making is aligned with that of the company's shareholders.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for SoundThinking that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.