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Shareholders will probably not be disappointed by the robust results at Standard Motor Products, Inc. (NYSE:SMP) recently and they will be keeping this in mind as they go into the AGM on 21 May 2021. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. We have prepared some analysis below and we show why we think CEO compensation looks decent with even the possibility for a raise.
How Does Total Compensation For Eric Sills Compare With Other Companies In The Industry?
At the time of writing, our data shows that Standard Motor Products, Inc. has a market capitalization of US$1.0b, and reported total annual CEO compensation of US$1.6m for the year to December 2020. That's a notable increase of 24% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$647k.
In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$3.5m. That is to say, Eric Sills is paid under the industry median. Furthermore, Eric Sills directly owns US$8.0m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 21% of total compensation represents salary and 79% is other remuneration. Standard Motor Products pays out 39% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Standard Motor Products, Inc.'s Growth
Standard Motor Products, Inc. has seen its earnings per share (EPS) increase by 38% a year over the past three years. It achieved revenue growth of 3.8% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent 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 Standard Motor Products, Inc. Been A Good Investment?
With a total shareholder return of 11% over three years, Standard Motor Products, Inc. shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which makes us a bit uncomfortable) in Standard Motor Products we think you should know about.
Important note: Standard Motor Products is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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