Most Shareholders Will Probably Agree With Ultra Clean Holdings, Inc.'s (NASDAQ:UCTT) CEO Compensation

Performance at Ultra Clean Holdings, Inc. (NASDAQ:UCTT) has been reasonably good and CEO Jim Scholhamer has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 20 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

Check out our latest analysis for Ultra Clean Holdings

How Does Total Compensation For Jim Scholhamer Compare With Other Companies In The Industry?

At the time of writing, our data shows that Ultra Clean Holdings, Inc. has a market capitalization of US$1.9b, and reported total annual CEO compensation of US$3.4m for the year to December 2020. That's a notable increase of 26% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$590k.

In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$3.4m. So it looks like Ultra Clean Holdings compensates Jim Scholhamer in line with the median for the industry. Furthermore, Jim Scholhamer directly owns US$15m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$590k	US$524k	17%
Other	US$2.8m	US$2.2m	83%
Total Compensation	US$3.4m	US$2.7m	100%

Talking in terms of the industry, salary represented approximately 13% of total compensation out of all the companies we analyzed, while other remuneration made up 87% of the pie. Ultra Clean Holdings pays out 17% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Ultra Clean Holdings, Inc.'s Growth

Ultra Clean Holdings, Inc. has reduced its earnings per share by 2.5% a year over the last three years. Its revenue is up 33% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Ultra Clean Holdings, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Ultra Clean Holdings, Inc. for providing a total return of 170% over three years. 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.

In Summary...

Although the company has performed relatively well, we still think there are some areas that could be improved. We reckon that there are some shareholders who may be hesitant to increase CEO pay further until EPS growth starts to improve, despite the robust revenue growth.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 3 warning signs for Ultra Clean Holdings that investors should look into moving forward.

Switching gears from Ultra Clean Holdings, 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.

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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.
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