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Is Energous Corporation's (NASDAQ:WATT) CEO Salary Justified?

Simply Wall St

Steve Rizzone has been the CEO of Energous Corporation (NASDAQ:WATT) since 2013. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Energous

How Does Steve Rizzone's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Energous Corporation has a market cap of US$60m, and reported total annual CEO compensation of US$652k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$365k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$515k.

So Steve Rizzone receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

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

NasdaqCM:WATT CEO Compensation, February 12th 2020

Is Energous Corporation Growing?

Energous Corporation has increased its earnings per share (EPS) by an average of 17% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 57%.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. Shareholders might be interested in this free visualization of analyst forecasts.

Has Energous Corporation Been A Good Investment?

Since shareholders would have lost about 89% over three years, some Energous Corporation shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Steve Rizzone is paid around what is normal the leaders of comparable size companies.

We like that the company is growing EPS, but we find the returns over the last three years to be lacking. Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. Whatever your view on compensation, you might want to check if insiders are buying or selling Energous shares (free trial).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.

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. Thank you for reading.