Is Smart Metering Systems plc’s (LON:SMS) CEO Paid At A Competitive Rate?

Alan Foy became the CEO of Smart Metering Systems plc (LON:SMS) in 2007. 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. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Smart Metering Systems

How Does Alan Foy’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Smart Metering Systems plc has a market cap of UK£617m, and reported total annual CEO compensation of UK£663k for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at UK£349k. We looked at a group of companies with market capitalizations from UK£306m to UK£1.2b, and the median CEO total compensation was UK£871k.

That means Alan Foy receives fairly typical remuneration for the CEO of a company that size. 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 Smart Metering Systems has changed from year to year.

AIM:SMS CEO Compensation, January 13th 2020
AIM:SMS CEO Compensation, January 13th 2020

Is Smart Metering Systems plc Growing?

Over the last three years Smart Metering Systems plc has shrunk its earnings per share by an average of 53% per year (measured with a line of best fit). In the last year, its revenue is up 18%.

Few shareholders would be pleased to read that earnings per share are lower over three years. And while it’s good to see some good revenue growth recently, the growth isn’t really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Smart Metering Systems plc Been A Good Investment?

With a three year total loss of 2.5%, Smart Metering Systems plc would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

Alan Foy is paid around what is normal the leaders of comparable size companies.

Returns have been disappointing and the company is not growing its earnings per share. Few would argue that it’s wise for the company to pay any more, before returns improve. Shareholders may want to check for free if Smart Metering Systems insiders are buying or selling shares.

Important note: Smart Metering Systems 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.

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