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How Should Investors React To SmartFinancial's (NASDAQ:SMBK) CEO Pay?

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Billy Carroll has been the CEO of SmartFinancial, Inc. (NASDAQ:SMBK) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether SmartFinancial pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for SmartFinancial

Comparing SmartFinancial, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that SmartFinancial, Inc. has a market capitalization of US$290m, and reported total annual CEO compensation of US$784k for the year to December 2019. Notably, that's an increase of 28% over the year before. In particular, the salary of US$457.1k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between US$100m and US$400m had a median total CEO compensation of US$795k. From this we gather that Billy Carroll is paid around the median for CEOs in the industry. Moreover, Billy Carroll also holds US$2.5m worth of SmartFinancial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2019

2018

Proportion (2019)

Salary

US$457k

US$380k

58%

Other

US$327k

US$232k

42%

Total Compensation

US$784k

US$612k

100%

On an industry level, roughly 43% of total compensation represents salary and 57% is other remuneration. SmartFinancial pays out 58% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
ceo-compensation

SmartFinancial, Inc.'s Growth

Over the past three years, SmartFinancial, Inc. has seen its earnings per share (EPS) grow by 22% per year. In the last year, its revenue is up 11%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 SmartFinancial, Inc. Been A Good Investment?

Given the total shareholder loss of 16% over three years, many shareholders in SmartFinancial, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, SmartFinancial, 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. At the same time, the company has logged negative shareholder returns over the last three years. But EPS growth is moving in a favorable direction, certainly a positive sign. Overall, we wouldn't say Billy is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for SmartFinancial 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.