Shareholders will probably not be disappointed by the robust results at Standard Motor Products, Inc. (NYSE:SMP) recently and they will be keeping this in mind as they go into the AGM on 21 May 2021. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.
How Does Total Compensation For Eric Sills Compare With Other Companies In The Industry?
According to our data, Standard Motor Products, Inc. has a market capitalization of US$1.0b, and paid its CEO total annual compensation worth US$1.6m over the year to December 2020. We note that's an increase of 24% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$647k.
On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$3.5m. Accordingly, Standard Motor Products pays its CEO under the industry median. What's more, Eric Sills holds US$8.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 21% of total compensation out of all the companies we analyzed, while other remuneration made up 79% of the pie. It's interesting to note that Standard Motor Products pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Standard Motor Products, Inc.'s Growth
Standard Motor Products, Inc.'s earnings per share (EPS) grew 38% per year over the last three years. It achieved revenue growth of 3.8% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Standard Motor Products, Inc. Been A Good Investment?
Standard Motor Products, Inc. has served shareholders reasonably well, with a total return of 11% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
The company's overall performance, while not bad, could be better. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which makes us a bit uncomfortable) in Standard Motor Products we think you should know about.
Switching gears from Standard Motor Products, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
If you’re looking to trade Standard Motor Products, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.