Is Wave Life Sciences Ltd.'s (NASDAQ:WVE) CEO Being Overpaid?
In 2013 Paul Bolno was appointed CEO of Wave Life Sciences Ltd. (NASDAQ:WVE). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. 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 Wave Life Sciences
How Does Paul Bolno's Compensation Compare With Similar Sized Companies?
Our data indicates that Wave Life Sciences Ltd. is worth US$285m, and total annual CEO compensation was reported as US$5.8m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$541k. 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$100m to US$400m, we found the median CEO total compensation was US$1.1m.
It would therefore appear that Wave Life Sciences Ltd. pays Paul Bolno more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Wave Life Sciences, below.
Is Wave Life Sciences Ltd. Growing?
On average over the last three years, Wave Life Sciences Ltd. has shrunk earnings per share by 27% each year (measured with a line of best fit). In the last year, its revenue is up 45%.
The reduction in earnings per share, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Shareholders might be interested in this free visualization of analyst forecasts.
Has Wave Life Sciences Ltd. Been A Good Investment?
With a three year total loss of 73%, Wave Life Sciences Ltd. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
We compared the total CEO remuneration paid by Wave Life Sciences Ltd., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Shareholders may wish to consider further research. Although we don't think the CEO pay is too high, it is probably more on the generous side of things. Shareholders may want to check for free if Wave Life Sciences insiders are buying or selling shares.
Important note: Wave Life Sciences 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.
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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