Our View On Smith Micro Software's (NASDAQ:SMSI) CEO Pay

This article will reflect on the compensation paid to William Smith who has served as CEO of Smith Micro Software, Inc. (NASDAQ:SMSI) since 1982. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Smith Micro Software.

View our latest analysis for Smith Micro Software

Comparing Smith Micro Software, Inc.'s CEO Compensation With the industry

According to our data, Smith Micro Software, Inc. has a market capitalization of US$161m, and paid its CEO total annual compensation worth US$1.2m over the year to December 2019. Notably, that's an increase of 32% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$475k.

In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$865k. Hence, we can conclude that William Smith is remunerated higher than the industry median. Moreover, William Smith also holds US$19m worth of Smith Micro Software stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 11% of total compensation out of all the companies we analyzed, while other remuneration made up 89% of the pie. Smith Micro Software pays out 40% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Smith Micro Software, Inc.'s Growth Numbers

Smith Micro Software, Inc. has seen its earnings per share (EPS) increase by 116% a year over the past three years. It achieved revenue growth of 51% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

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

Boasting a total shareholder return of 286% 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.

To Conclude...

As we touched on above, Smith Micro Software, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, Smith Micro Software has produced strong EPS growth and shareholder returns over the last three years. Considering such exceptional results for the company, we'd venture to say CEO compensation is fair. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that William's performance creates value for the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Smith Micro Software (1 doesn't sit too well with us!) that you should be aware of before investing here.

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.

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