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In 1993 Gary Fairhead was appointed CEO of SigmaTron International, Inc. (NASDAQ:SGMA). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 method should give us information to assess how appropriately the company pays the CEO.
How Does Gary Fairhead's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that SigmaTron International, Inc. has a market cap of US$9.4m, and is paying total annual CEO compensation of US$304k. (This is based on the year to April 2018). It is worth noting that the CEO compensation consists almost entirely of the salary, worth US$300k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$452k.
Most shareholders would consider it a positive that Gary Fairhead takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at SigmaTron International has changed from year to year.
Is SigmaTron International, Inc. Growing?
Over the last three years SigmaTron International, Inc. has shrunk its earnings per share by an average of 100% per year (measured with a line of best fit). Its revenue is up 3.5% over last year.
Unfortunately, earnings per share have trended lower over the last three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has SigmaTron International, Inc. Been A Good Investment?
With a three year total loss of 63%, SigmaTron International, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
SigmaTron International, Inc. is currently paying its CEO below what is normal for companies of its size.
The compensation paid to Gary Fairhead is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at SigmaTron International.
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.
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 email@example.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.