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Gary Fairhead has been the CEO of SigmaTron International, Inc. (NASDAQ:SGMA) since 1993, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for SigmaTron International.
Comparing SigmaTron International, Inc.'s CEO Compensation With the industry
Our data indicates that SigmaTron International, Inc. has a market capitalization of US$13m, and total annual CEO compensation was reported as US$346k for the year to April 2020. That's just a smallish increase of 6.1% on last year. We note that the salary portion, which stands at US$300.0k constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$362k. This suggests that SigmaTron International remunerates its CEO largely in line with the industry average. Furthermore, Gary Fairhead directly owns US$273k worth of shares in the company.
On an industry level, around 35% of total compensation represents salary and 65% is other remuneration. SigmaTron International pays out 87% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
SigmaTron International, Inc.'s Growth
Earnings per share at SigmaTron International, Inc. are much the same as they were three years ago, albeit with slightly higher. In the last year, its revenue is down 8.7%.
We generally like to see a little revenue growth, but the modest EPSgrowth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has SigmaTron International, Inc. Been A Good Investment?
Given the total shareholder loss of 63% over three years, many shareholders in SigmaTron International, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, SigmaTron International, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, SigmaTron International is suffering from adverse shareholder returns and althoughEPS have grown over the past three years, they have not been extraordinary. We'd stop short of saying CEO compensation is inappropriate, but without an improvement in performance, it's sure to draw criticism. Shareholders will also not want to see performance improving before agreeing to any raise.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 2 which are a bit concerning) in SigmaTron International we think you should know about.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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