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Sean Moriarty has been the CEO of Leaf Group Ltd. (NYSE:LEAF) since 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Sean Moriarty's Compensation Compare With Similar Sized Companies?
According to our data, Leaf Group Ltd. has a market capitalization of US$175m, and pays its CEO total annual compensation worth US$2.3m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$400k. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO total compensation of that group was US$1.2m.
Thus we can conclude that Sean Moriarty receives more in total compensation than the median of a group of companies in the same market, and of similar size to Leaf Group Ltd.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Leaf Group has changed from year to year.
Is Leaf Group Ltd. Growing?
Leaf Group Ltd. has reduced its earnings per share by an average of 5.9% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 15% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Leaf Group Ltd. Been A Good Investment?
Leaf Group Ltd. has served shareholders reasonably well, with a total return of 25% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
We compared total CEO remuneration at Leaf Group Ltd. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
And while shareholder returns have been respectable, they have hardly been superb. So you may want to delve deeper, because we don't think the CEO pay is too low. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Leaf Group.
Important note: Leaf Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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 email@example.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.