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Is Wave Life Sciences Ltd. (NASDAQ:WVE) Overpaying Its CEO?

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Simply Wall St
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In 2013 Paul Bolno was appointed CEO of Wave Life Sciences Ltd. (NASDAQ:WVE). First, this article will compare CEO compensation with compensation at similar sized companies. 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 Wave Life Sciences

How Does Paul Bolno's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Wave Life Sciences Ltd. has a market cap of US$924m, and is paying total annual CEO compensation of US$5.8m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$541k. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$2.7m.

Thus we can conclude that Paul Bolno receives more in total compensation than the median of a group of companies in the same market, and of similar size to Wave Life Sciences Ltd.. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Wave Life Sciences has changed over time.

NasdaqGM:WVE CEO Compensation, July 17th 2019
NasdaqGM:WVE CEO Compensation, July 17th 2019

Is Wave Life Sciences Ltd. Growing?

On average over the last three years, Wave Life Sciences Ltd. has shrunk earnings per share by 36% each year (measured with a line of best fit). In the last year, its revenue is up 225%.

As investors, we are a bit wary of companies that have lower earnings per share, over three years. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Shareholders might be interested in this free visualization of analyst forecasts.

Has Wave Life Sciences Ltd. Been A Good Investment?

Wave Life Sciences Ltd. has generated a total shareholder return of 19% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

We compared total CEO remuneration at Wave Life Sciences Ltd. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. Considering this, we wouldn't want to see any big pay rises, although we'd stop short of calling the CEO compensation unfair. Shareholders may want to check for free if Wave Life Sciences insiders are buying or selling shares.

If you want to buy a stock that is better than Wave Life Sciences, this free list of high return, low debt companies is a great place to look.

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.