Stock Analysis

What Can We Conclude About SigmaTron International's (NASDAQ:SGMA) CEO Pay?

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This article will reflect on the compensation paid to Gary Fairhead who has served as CEO of SigmaTron International, Inc. (NASDAQ:SGMA) since 1993. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

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How Does Total Compensation For Gary Fairhead Compare With Other Companies In The Industry?

At the time of writing, our data shows that SigmaTron International, Inc. has a market capitalization of US$20m, and reported total annual CEO compensation of US$346k for the year to April 2020. That's a fairly small increase of 6.1% over the previous year. Notably, the salary which is US$300.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$362k. This suggests that SigmaTron International remunerates its CEO largely in line with the industry average. Furthermore, Gary Fairhead directly owns US$413k worth of shares in the company.

Component20202019Proportion (2020)
Salary US$300k US$297k 87%
Other US$46k US$28k 13%
Total CompensationUS$346k US$326k100%

On an industry level, roughly 34% of total compensation represents salary and 66% is other remuneration. It's interesting to note that SigmaTron International pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

NasdaqCM:SGMA CEO Compensation January 1st 2021

A Look at SigmaTron International, Inc.'s Growth Numbers

Over the past three years, SigmaTron International, Inc. has seen its earnings per share (EPS) grow by 17% per year. Its revenue is down 9.9% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has SigmaTron International, Inc. Been A Good Investment?

With a three year total loss of 54% for the shareholders, SigmaTron International, Inc. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we noted earlier, SigmaTron International pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. But EPS growth is moving in a favorable direction, certainly a positive sign. Considering positive EPS growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for SigmaTron International (2 can't be ignored!) that you should be aware of before investing here.

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