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Is Trupanion, Inc.'s (NASDAQ:TRUP) CEO Overpaid Relative To Its Peers?

Simply Wall St

Darryl Graham Rawlings has been the CEO of Trupanion, Inc. (NASDAQ:TRUP) since 2000. 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Trupanion

How Does Darryl Graham Rawlings's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Trupanion, Inc. has a market cap of US$1.1b, and reported total annual CEO compensation of US$876k for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$300k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.5m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. 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 Trupanion, below.

NasdaqGM:TRUP CEO Compensation, January 17th 2020

Is Trupanion, Inc. Growing?

Trupanion, Inc. has increased its earnings per share (EPS) by an average of 67% a year, over the last three years (using a line of best fit). It achieved revenue growth of 25% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. It could be important to check this free visual depiction of what analysts expect for the future.

Has Trupanion, Inc. Been A Good Investment?

I think that the total shareholder return of 126%, over three years, would leave most Trupanion, Inc. shareholders smiling. 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 looks like Trupanion, Inc. pays its CEO less than similar sized companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Darryl Graham Rawlings deserves a raise! It's not often we see shareholders do so well, and yet the CEO is paid modestly. It would be even more positive if company insiders are buying shares. Whatever your view on compensation, you might want to check if insiders are buying or selling Trupanion 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.

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