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Should You Worry About SMTC Corporation's (NASDAQ:SMTX) CEO Pay?

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Simply Wall St
·3 min read
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Eddie, Ed Smith became the CEO of SMTC Corporation (NASDAQ:SMTX) in 2017. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for SMTC

How Does Eddie, Ed Smith's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that SMTC Corporation has a market cap of US$64m, and reported total annual CEO compensation of US$511k for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$350k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$596k.

So Eddie, Ed 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.

The graphic below shows how CEO compensation at SMTC has changed from year to year.

NasdaqGM:SMTX CEO Compensation, March 13th 2020
NasdaqGM:SMTX CEO Compensation, March 13th 2020

Is SMTC Corporation Growing?

Over the last three years SMTC Corporation has grown its earnings per share (EPS) by an average of 3.0% per year (using a line of best fit). It achieved revenue growth of 109% over the last year.

It's great to see that revenue growth is strong. And in that context, the modest EPS improvement certainly isn't shabby. I'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. It could be important to check this free visual depiction of what analysts expect for the future.

Has SMTC Corporation Been A Good Investment?

Boasting a total shareholder return of 68% over three years, SMTC Corporation has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Eddie, Ed Smith is paid around the same as most CEOs of similar size companies.

The company isn't showing particularly great growth, but shareholder returns have been pleasing. So considering most shareholders would be happy, we'd say the CEO pay is appropriate. On another note, we've spotted 4 warning signs for SMTC 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.

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.