Is Cabot Microelectronics Corporation's (NASDAQ:CCMP) CEO Overpaid Relative To Its Peers?

David Li became the CEO of Cabot Microelectronics Corporation (NASDAQ:CCMP) 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. 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.

View our latest analysis for Cabot Microelectronics

How Does David Li's Compensation Compare With Similar Sized Companies?

According to our data, Cabot Microelectronics Corporation has a market capitalization of US$3.3b, and pays its CEO total annual compensation worth US$5.5m. (This number is for the twelve months until September 2018). While we always look at total compensation first, we note that the salary component is less, at US$645k. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO total compensation was US$5.1m.

That means David Li 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 Cabot Microelectronics has changed from year to year.

Is Cabot Microelectronics Corporation Growing?

Over the last three years Cabot Microelectronics Corporation has grown its earnings per share (EPS) by an average of 21% per year (using a line of best fit). It achieved revenue growth of 61% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly.

Has Cabot Microelectronics Corporation Been A Good Investment?

Boasting a total shareholder return of 138% over three years, Cabot Microelectronics Corporation has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Remuneration for David Li is close enough to the median pay for a CEO of a similar sized company .

Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. So one could argue the CEO compensation is quite modest, if you consider company performance! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Cabot Microelectronics.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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.