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Should You Worry About Smiths Group plc's (LON:SMIN) CEO Pay?

Simply Wall St

Andy Smith became the CEO of Smiths Group plc (LON:SMIN) in 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Smiths Group

How Does Andy Smith's Compensation Compare With Similar Sized Companies?

Our data indicates that Smiths Group plc is worth UK£6.3b, and total annual CEO compensation is UK£3.3m. (This number is for the twelve months until July 2018). While we always look at total compensation first, we note that the salary component is less, at UK£800k. We looked at a group of companies with market capitalizations from UK£3.2b to UK£9.6b, and the median CEO total compensation was UK£2.8m.

So Andy Smith is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

The graphic below shows how CEO compensation at Smiths Group has changed from year to year.

LSE:SMIN CEO Compensation, July 22nd 2019

Is Smiths Group plc Growing?

Smiths Group plc has increased its earnings per share (EPS) by an average of 1.1% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 1.2%.

I'm not particularly impressed by the revenue growth, but I'm happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. You might want to check this free visual report on analyst forecasts for future earnings.

Has Smiths Group plc Been A Good Investment?

I think that the total shareholder return of 40%, over three years, would leave most Smiths Group plc shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Andy Smith is paid around the same as most CEOs of similar size companies.

The company isn't showing particularly great growth, but shareholder returns have been pleasing. So all things considered I'd venture that the CEO pay is appropriate. So you may want to check if insiders are buying Smiths Group shares with their own money (free access).

If you want to buy a stock that is better than Smiths Group, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.