Should You Worry About Smiths Group plc’s (LON:SMIN) CEO Pay?

Andy Smith became the CEO of Smiths Group plc (LON:SMIN) in 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Smiths Group

How Does Andy Smith’s Compensation Compare With Similar Sized Companies?

According to our data, Smiths Group plc has a market capitalization of UK£6.2b, and pays its CEO total annual compensation worth UK£3.3m. (This figure is for the year to July 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at UK£800k. When we examined a selection of companies with market caps ranging from UK£3.3b to UK£9.9b, we found the median CEO total compensation was UK£2.8m.

So Andy Smith is paid around the average of the companies we looked at. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see a visual representation of the CEO compensation at Smiths Group, below.

LSE:SMIN CEO Compensation, August 19th 2019
LSE:SMIN CEO Compensation, August 19th 2019

Is Smiths Group plc Growing?

Smiths Group plc has increased its earnings per share (EPS) by an average of 1.1% a year, over the last three years (using a line of best fit). It achieved revenue growth of 1.2% over the last year.

I’m not particularly impressed by the revenue growth, but it is good to see modest EPS growth. It’s clear the performance has been quite decent, but it it falls short of outstanding,based on this information.

Has Smiths Group plc Been A Good Investment?

Smiths Group plc has served shareholders reasonably well, with a total return of 25% over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.

In Summary…

Andy Smith is paid around the same as most CEOs of similar size companies.

We think many would like to see better growth. While there is room for improvement, we haven’t seen evidence to suggest the pay is too generous. So you may want to check if insiders are buying Smiths Group shares with their own money (free access).

Important note: Smiths Group 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.

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.

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. Thank you for reading.