Smith Micro Software, Inc.'s (NASDAQ:SMSI) CEO Compensation Is Looking A Bit Stretched At The Moment

By
Simply Wall St
Published
June 01, 2021
NasdaqCM:SMSI
Source: Shutterstock

Under the guidance of CEO William Smith, Smith Micro Software, Inc. (NASDAQ:SMSI) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 08 June 2021. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for Smith Micro Software

How Does Total Compensation For William Smith Compare With Other Companies In The Industry?

Our data indicates that Smith Micro Software, Inc. has a market capitalization of US$287m, and total annual CEO compensation was reported as US$1.9m for the year to December 2020. We note that's an increase of 62% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$496k.

In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$1.0m. This suggests that William Smith is paid more than the median for the industry. What's more, William Smith holds US$27m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$496k US$475k 26%
Other US$1.4m US$712k 74%
Total CompensationUS$1.9m US$1.2m100%

On an industry level, roughly 11% of total compensation represents salary and 89% is other remuneration. Smith Micro Software pays out 26% 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.

ceo-compensation
NasdaqCM:SMSI CEO Compensation June 2nd 2021

A Look at Smith Micro Software, Inc.'s Growth Numbers

Smith Micro Software, Inc.'s earnings per share (EPS) grew 85% per year over the last three years. In the last year, its revenue is up 2.3%.

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 Smith Micro Software, Inc. Been A Good Investment?

We think that the total shareholder return of 108%, over three years, would leave most Smith Micro Software, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Smith Micro Software that you should be aware of before investing.

Switching gears from Smith Micro Software, 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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.