In This Article:
Mike Calise took the reins as CEO of Blink Charging Co’s (NASDAQ:BLNK) and grew market cap to US$33.56M recently. Recognizing whether CEO incentives are aligned with shareholders is a crucial part of investing. Incentives can be in the form of compensation, which should always be structured in a way that promotes value-creation to shareholders. Today we will assess Calise’s pay and compare this to the company’s performance over the same period, as well as measure it against other US CEOs leading companies of similar size and profitability. Check out our latest analysis for Blink Charging
What has BLNK’s performance been like?
Profitability of a company is a strong indication of BLNK’s ability to generate returns on shareholders’ funds through corporate activities. In this exercise, I will use profits as a proxy for Calise’s performance. In the past year, BLNK released negative earnings of -US$79.63M , which is a further decline from prior year’s loss of -US$9.17M. Additionally, on average, BLNK has been loss-making in the past, with a 5-year average EPS of -US$12.61. In the situation of negative earnings, the company may be facing a period of reinvestment and growth, or it can be a signal of some headwind. In any event, CEO compensation should mirror the current condition of the business. In the latest financial report, Calise’s total remuneration grew by 10.15% to US$507.82K. Furthermore, Calise’s pay is also made up of 74.41% non-cash elements, which means that fluctuations in BLNK’s share price can move the real level of what the CEO actually takes home at the end of the day.
Is BLNK overpaying the CEO?
Though no standard benchmark exists, as remuneration should be tailored to the specific company and market, we can evaluate a high-level thresold to see if BLNK deviates substantially from its peers. This outcome helps investors ask the right question about Calise’s incentive alignment. Normally, a US small-cap has a value of $1B, produces earnings of $96M, and remunerates its CEO circa $2.7M per annum. Typically I would look at market cap and earnings as a proxy for performance, however, BLNK’s negative earnings lower the effectiveness of this method. Given the range of pay for small-cap executives, it seems like Calise is paid aptly compared to those in similar-sized companies. On the whole, though BLNK is unprofitable, it seems like the CEO’s pay is reflective of the appropriate level.
Next Steps:
Board members are the voice of shareholders. Although CEO pay doesn’t necessarily make a big dent in your investment thesis in BLNK, proper governance on behalf of your investment should be a key concern. These decisions made by top management and directors flow down into financials which impact returns to investors. If you have not done so already, I highly recommend you to complete your research by taking a look at the following: