Jim Scholhamer became the CEO of Ultra Clean Holdings, Inc. (NASDAQ:UCTT) in 2015. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Jim Scholhamer’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Ultra Clean Holdings, Inc. has a market cap of US$1.0b, and reported total annual CEO compensation of US$2.3m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$495k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.5m.
So Jim Scholhamer 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 Ultra Clean Holdings has changed from year to year.
Is Ultra Clean Holdings, Inc. Growing?
Over the last three years Ultra Clean Holdings, Inc. has shrunk its earnings per share by an average of 6.6% per year (measured with a line of best fit). It saw its revenue drop 4.7% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Ultra Clean Holdings, Inc. Been A Good Investment?
Boasting a total shareholder return of 105% over three years, Ultra Clean Holdings, 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.
Jim Scholhamer is paid around what is normal the leaders of comparable size companies.
We feel that earnings per share have been a bit disappointing, but it’s nice to see positive shareholder returns over the last three years. So we can’t see a reason to suggest the pay is inappropriate. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Ultra Clean Holdings (free visualization of insider trades).
Important note: Ultra Clean 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.
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