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Is Intuitive Surgical, Inc. (NASDAQ:ISRG) Overpaying Its CEO?

Simply Wall St

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In 2010 Gary Guthart was appointed CEO of Intuitive Surgical, Inc. (NASDAQ:ISRG). This analysis aims first to contrast CEO compensation with 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. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Intuitive Surgical

How Does Gary Guthart's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Intuitive Surgical, Inc. has a market cap of US$61b, and is paying total annual CEO compensation of US$6.4m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$767k. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

A first glance this seems like a real positive for shareholders, since Gary Guthart is paid less than the average total compensation paid by other large companies. Though positive, it's important we delve into the performance of the actual business.

You can see, below, how CEO compensation at Intuitive Surgical has changed over time.

NasdaqGS:ISRG CEO Compensation, July 15th 2019

Is Intuitive Surgical, Inc. Growing?

On average over the last three years, Intuitive Surgical, Inc. has grown earnings per share (EPS) by 15% each year (using a line of best fit). In the last year, its revenue is up 16%.

This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.

Has Intuitive Surgical, Inc. Been A Good Investment?

Boasting a total shareholder return of 136% over three years, Intuitive Surgical, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

It appears that Intuitive Surgical, Inc. remunerates its CEO below most large companies. Many would consider this to indicate that the pay is modest since the business is growing. The pleasing shareholder returns are the cherry on top; you might even consider that Gary Guthart deserves a raise!

It's not often we see shareholders do so well, and yet the CEO is paid modestly. But it is even better if company insiders are also buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Intuitive Surgical.

Important note: Intuitive Surgical 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 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.