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Does CMC Materials' (NASDAQ:CCMP) CEO Salary Compare Well With Industry Peers?

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David Li became the CEO of CMC Materials, Inc. (NASDAQ:CCMP) in 2015, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether CMC Materials pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for CMC Materials

How Does Total Compensation For David Li Compare With Other Companies In The Industry?

According to our data, CMC Materials, Inc. has a market capitalization of US$5.0b, and paid its CEO total annual compensation worth US$5.2m over the year to September 2020. Notably, that's an increase of 9.4% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$700k.

On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$5.1m. So it looks like CMC Materials compensates David Li in line with the median for the industry. What's more, David Li holds US$11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

US$700k

US$688k

14%

Other

US$4.5m

US$4.0m

86%

Total Compensation

US$5.2m

US$4.7m

100%

Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. CMC Materials sets aside a smaller share of compensation for 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.

ceo-compensation
ceo-compensation

A Look at CMC Materials, Inc.'s Growth Numbers

CMC Materials, Inc. has seen its earnings per share (EPS) increase by 24% a year over the past three years. Its revenue is up 2.0% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has CMC Materials, Inc. Been A Good Investment?

Boasting a total shareholder return of 68% over three years, CMC Materials, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

As previously discussed, David is compensated close to the median for companies of its size, and which belong to the same industry. The company is growing EPS and total shareholder returns have been pleasing. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for CMC Materials that investors should look into moving forward.

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.

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. 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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