Does EMCORE Corporation’s (NASDAQ:EMKR) CEO Pay Matter?

In 2015 Jeff Rittichier was appointed CEO of EMCORE Corporation (NASDAQ:EMKR). First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. 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.

Check out our latest analysis for EMCORE

How Does Jeff Rittichier’s Compensation Compare With Similar Sized Companies?

Our data indicates that EMCORE Corporation is worth US$90m, and total annual CEO compensation was reported as US$1.0m for the year to September 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$425k. 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$509k.

Thus we can conclude that Jeff Rittichier receives more in total compensation than the median of a group of companies in the same market, and of similar size to EMCORE Corporation. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. You might want to check this free visual report on analyst forecasts for future earnings.

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

NasdaqGM:EMKR CEO Compensation, December 7th 2019
NasdaqGM:EMKR CEO Compensation, December 7th 2019

Is EMCORE Corporation Growing?

On average over the last three years, EMCORE Corporation has shrunk earnings per share by 108% each year (measured with a line of best fit). It saw its revenue drop 1.5% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

Has EMCORE Corporation Been A Good Investment?

Given the total loss of 64% over three years, many shareholders in EMCORE Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared total CEO remuneration at EMCORE Corporation with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. Arguably worse, investors are without a positive return for the last three years. In our opinion the CEO might be paid too generously! Shareholders may want to check for free if EMCORE insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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