Performance at EMCORE Corporation (NASDAQ:EMKR) has been reasonably good and CEO Jeff Rittichier has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 19 March 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.
Comparing EMCORE Corporation's CEO Compensation With the industry
According to our data, EMCORE Corporation has a market capitalization of US$248m, and paid its CEO total annual compensation worth US$2.1m over the year to September 2020. That's a notable increase of 49% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$450k.
On examining similar-sized companies in the industry with market capitalizations between US$100m and US$400m, we discovered that the median CEO total compensation of that group was US$902k. Hence, we can conclude that Jeff Rittichier is remunerated higher than the industry median. Moreover, Jeff Rittichier also holds US$1.8m worth of EMCORE stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 28% of total compensation represents salary, while the remainder of 72% is other remuneration. In EMCORE's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at EMCORE Corporation's Growth Numbers
EMCORE Corporation has reduced its earnings per share by 25% a year over the last three years. In the last year, its revenue is up 33%.
The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 EMCORE Corporation Been A Good Investment?
With a total shareholder return of 14% over three years, EMCORE Corporation shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
Some shareholders will be pleased by the relatively good results, however, the results could still be improved. Until EPS growth picks back up, we think shareholders may find it hard to justify increasing CEO pay given that they are already paid above industry average.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for EMCORE that investors should be aware of in a dynamic business environment.
Important note: EMCORE is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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