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How Should Investors React To Ultra Clean Holdings Inc’s (NASDAQ:UCTT) CEO Pay?

Jim Scholhamer has been the CEO of Ultra Clean Holdings Inc (NASDAQ:UCTT) since 2015. First, this article will compare CEO compensation with compensation at similar sized companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Ultra Clean Holdings

How Does Jim Scholhamer’s Compensation Compare With Similar Sized Companies?

Our data indicates that Ultra Clean Holdings Inc is worth US$385m, and total annual CEO compensation is US$3m. That’s a notable increase of 90% on last year. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO compensation of that group was US$2m.

As you can see, Jim Scholhamer is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Ultra Clean Holdings Inc is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Ultra Clean Holdings, below.

NasdaqGS:UCTT CEO Compensation October 26th 18

Is Ultra Clean Holdings Inc Growing?

On average over the last three years, Ultra Clean Holdings Inc has grown earnings per share (EPS) by 99% each year. In the last year, its revenue is up 46%.

This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see.

You might want to check this free visual report on analyst forecasts for future earnings.

Has Ultra Clean Holdings Inc Been A Good Investment?

Boasting a total shareholder return of 105% over three years, Ultra Clean Holdings Inc has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO is paid more than is normal for a company of its size.

In Summary…

We compared total CEO remuneration at Ultra Clean Holdings Inc with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Ultra Clean Holdings Inc insiders are buying or selling shares.

Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.