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Does Wayfair Inc.'s (NYSE:W) CEO Salary Reflect Performance?

Simply Wall St

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Niraj Shah became the CEO of Wayfair Inc. (NYSE:W) in 2002. First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. 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.

View our latest analysis for Wayfair

How Does Niraj Shah's Compensation Compare With Similar Sized Companies?

According to our data, Wayfair Inc. has a market capitalization of US$13b, and pays its CEO total annual compensation worth US$83k. (This is based on the year to December 2018). That's just a smallish increase of 0.01% on last year. It is worth noting that the CEO compensation consists almost entirely of the salary, worth US$80k. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$12m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

A first glance this seems like a real positive for shareholders, since Niraj Shah is paid less than the average total compensation paid by other large companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see a visual representation of the CEO compensation at Wayfair, below.

NYSE:W CEO Compensation, May 31st 2019

Is Wayfair Inc. Growing?

Wayfair Inc. has reduced its earnings per share by an average of 51% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 42% over the last year.

The reduction in earnings per share, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Shareholders might be interested in this free visualization of analyst forecasts.

Has Wayfair Inc. Been A Good Investment?

Boasting a total shareholder return of 244% over three years, Wayfair Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

It looks like Wayfair Inc. pays its CEO less than the average at large companies.

Niraj Shah receives relatively low remuneration compared to other large companies. And the returns to shareholders were great, over the last few years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. Shareholders may want to check for free if Wayfair insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.