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Is Smith Micro Software, Inc.'s (NASDAQ:SMSI) CEO Pay Justified?

Simply Wall St

William Smith became the CEO of Smith Micro Software, Inc. (NASDAQ:SMSI) in 1982. 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 process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Smith Micro Software

How Does William Smith's Compensation Compare With Similar Sized Companies?

Our data indicates that Smith Micro Software, Inc. is worth US$181m, and total annual CEO compensation was reported as US$900k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$475k. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO total compensation of that group was US$1.1m.

So William Smith is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

You can see, below, how CEO compensation at Smith Micro Software has changed over time.

NasdaqCM:SMSI CEO Compensation, January 15th 2020

Is Smith Micro Software, Inc. Growing?

Smith Micro Software, Inc. has increased its earnings per share (EPS) by an average of 89% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 56%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.

Has Smith Micro Software, Inc. Been A Good Investment?

Boasting a total shareholder return of 129% over three years, Smith Micro Software, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

William Smith is paid around what is normal the leaders of comparable size companies.

Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Smith Micro Software (free visualization of insider trades).

Important note: Smith Micro Software may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

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. Thank you for reading.