Shareholders May Find It Hard To Justify Increasing Smartsheet Inc.'s (NYSE:SMAR) CEO Compensation For Now

Key Insights

• Smartsheet to hold its Annual General Meeting on 18th of June
• CEO Mark Mader's total compensation includes salary of US$587.1k
• The total compensation is similar to the average for the industry
• Smartsheet's three-year loss to shareholders was 31% while its EPS grew by 11% over the past three years

The underwhelming share price performance of Smartsheet Inc. (NYSE:SMAR) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 18th of June. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Smartsheet

Comparing Smartsheet Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Smartsheet Inc. has a market capitalization of US$6.0b, and reported total annual CEO compensation of US$10m for the year to January 2024. That's a notable decrease of 29% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$587k.

For comparison, other companies in the American Software industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$11m. From this we gather that Mark Mader is paid around the median for CEOs in the industry. What's more, Mark Mader holds US$34m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	US$587k	US$540k	6%
Other	US$9.6m	US$14m	94%
Total Compensation	US$10m	US$14m	100%

Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. Smartsheet sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Smartsheet Inc.'s Growth

Smartsheet Inc.'s earnings per share (EPS) grew 11% per year over the last three years. Its revenue is up 22% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Smartsheet Inc. Been A Good Investment?

Few Smartsheet Inc. shareholders would feel satisfied with the return of -31% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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. That's why we did some digging and identified 1 warning sign for Smartsheet that investors should think about before committing capital to this stock.

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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.