Why Alarm.com Holdings, Inc.'s (NASDAQ:ALRM) CEO Pay Matters To You
Steve Trundle became the CEO of Alarm.com Holdings, Inc. (NASDAQ:ALRM) in 2003. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Alarm.com Holdings
How Does Steve Trundle's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Alarm.com Holdings, Inc. has a market cap of US$2.1b, and reported total annual CEO compensation of US$3.0m for the year to December 2019. That's a notable increase of 56% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$210k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$4.9m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 12% of total compensation out of all the companies we analysed, while other remuneration made up 88% of the pie. It's interesting to note that Alarm.com Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry.
Most shareholders would consider it a positive that Steve Trundle 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. You can see a visual representation of the CEO compensation at Alarm.com Holdings, below.
Is Alarm.com Holdings, Inc. Growing?
Over the last three years Alarm.com Holdings, Inc. has seen earnings per share (EPS) move in a positive direction by an average of 29% per year (using a line of best fit). In the last year, its revenue is up 19%.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has Alarm.com Holdings, Inc. Been A Good Investment?
Alarm.com Holdings, Inc. has generated a total shareholder return of 32% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
In Summary...
It appears that Alarm.com Holdings, Inc. remunerates its CEO below most similar sized companies.
Many would consider this to indicate that the pay is modest since the business is growing. While returns over the last few years haven't been top notch, there is nothing to suggest to us that Steve Trundle is overcompensated. It's good to see reasonable payment of the CEO, even while the business improves. It would be an additional positive if insiders are buying shares. Moving away from CEO compensation for the moment, we've identified 1 warning sign for Alarm.com Holdings that you should be aware of before investing.
Important note: Alarm.com Holdings 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.
