How Much Did LendingClub's (NYSE:LC) CEO Pocket Last Year?
This article will reflect on the compensation paid to Scott Sanborn who has served as CEO of LendingClub Corporation (NYSE:LC) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for LendingClub
How Does Total Compensation For Scott Sanborn Compare With Other Companies In The Industry?
Our data indicates that LendingClub Corporation has a market capitalization of US$468m, and total annual CEO compensation was reported as US$6.1m for the year to December 2019. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at US$500k.
On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$3.5m. Hence, we can conclude that Scott Sanborn is remunerated higher than the industry median. Moreover, Scott Sanborn also holds US$3.8m worth of LendingClub stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$500k | US$500k | 8% |
Other | US$5.6m | US$5.5m | 92% |
Total Compensation | US$6.1m | US$6.0m | 100% |
On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. In LendingClub's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
LendingClub Corporation's Growth
Over the past three years, LendingClub Corporation has seen its earnings per share (EPS) grow by 22% per year. It saw its revenue drop 43% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has LendingClub Corporation Been A Good Investment?
Since shareholders would have lost about 76% over three years, some LendingClub Corporation investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
As we touched on above, LendingClub Corporation is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has impressed with its EPS growth, but shareholder returns — over the same period — have been disappointing. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for LendingClub that investors should think about before committing capital to this stock.
Switching gears from LendingClub, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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