(I'm running late today, so will keep updating this article this afternoon, after lunch)
I enjoyed the latest small caps broadcast from Share Radio, with my friend David Stredder giving his views on a number of stocks. Of particular note, as ever, is the topic of Director greed. This time, my attention has been brought to the ridiculous remuneration of the CEO at eg Solutions (LON:EGS) who has plundered this tiny, and usually loss-making company for extraordinary levels of remuneration over the years.
I've looked at the last few Annual Reports, and extracted the following key data;
|Profit/(loss) before tax||£407k||(£1,479k)||(£458k)||£146k|
|CEO total remuneration||£372k||£390k||£439k||£450k|
Adding up those figures, in the last 4 years this company made a total loss of nearly £1.4m, and paid its CEO £1.65m! You have to ask, what planet is this CEO on?! No wonder the company had to do a £3.2m Placing last year, to replenish its bank account - as the CEO's emptied it basically!
I am told that at a recent ShareSoc meeting, where the questioning can be tough, this CEO retorted to a question about her remuneration by saying, "If you don't think I'm worth it, then I don't want you as a shareholder!". Unbelievable.
So this stock is going on my Bargepole List as a result. It's always worth comparing Director pay with profits. It can then become alarmingly clear whose benefit the company is run for - and it's not shareholders, that's for sure.
There's nothing worse than management who use a small, loss-making company as a personal piggy bank. As an aside, it's a pity that Director expense accounts are not disclosed in Annual Reports, as I'm certain there are some horror stories there too at some companies - I've been told about some small cap Directors who enjoy lavish entertaining, first class flights, posh hotels, etc., all on the expense account.
I do wish shareholders would step up, and exert better restraint/control on Directors. No wonder we have so many corporate scandals, excessive pay, bonus culture, etc. The managerial class is totally out of control! I don't think Directors understand how angry private investors are getting about executive greed.
Share price: 41.9p (up 1.6% today)
No. shares: 117.4m
Market cap: £49.2m
Trading update - a solid update from this software specialist;
Vicon and Yotta have traded…