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Does Alarm.com Holdings, Inc.'s (NASDAQ:ALRM) CEO Pay Reflect Performance?

Simply Wall St

In 2003 Steve Trundle was appointed CEO of Alarm.com Holdings, Inc. (NASDAQ:ALRM). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Alarm.com Holdings

How Does Steve Trundle's Compensation Compare With Similar Sized Companies?

Our data indicates that Alarm.com Holdings, Inc. is worth US$2.4b, and total annual CEO compensation was reported as US$1.9m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$210k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.1m.

A first glance this seems like a real positive for shareholders, since Steve Trundle is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see a visual representation of the CEO compensation at Alarm.com Holdings, below.

NasdaqGS:ALRM CEO Compensation, November 4th 2019

Is Alarm.com Holdings, Inc. Growing?

On average over the last three years, Alarm.com Holdings, Inc. has grown earnings per share (EPS) by 21% each year (using a line of best fit). It achieved revenue growth of 22% over the last year.

This demonstrates that the company has been improving recently. A good result. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.

Has Alarm.com Holdings, Inc. Been A Good Investment?

I think that the total shareholder return of 69%, over three years, would leave most Alarm.com Holdings, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

It appears that Alarm.com Holdings, Inc. remunerates its CEO below most similar sized companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Steve Trundle deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. But it is even better if company insiders are also buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Alarm.com Holdings.

Important note: Alarm.com Holdings may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.