Josh Silverman became the CEO of Etsy, Inc. (NASDAQ:ETSY) in 2017. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Josh Silverman’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Etsy, Inc. has a market cap of US$8.6b, and reported total annual CEO compensation of US$1.1m for the year to December 2019. That’s a fairly small increase of 3.8% on year before. While we always look at total compensation first, we note that the salary component is less, at US$475k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$7.4m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it’s no different in the case of Etsy. Talking in terms of the sector, salary represented approximately 29% of total compensation out of all the companies we analysed, while other remuneration made up 71% of the pie. According to our research, Etsy has allocated a higher percentage of pay to salary in comparison to the broader sector.
Most shareholders would consider it a positive that Josh Silverman takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance. You can see, below, how CEO compensation at Etsy has changed over time.
Is Etsy, Inc. Growing?
On average over the last three years, Etsy, Inc. has seen earnings per share (EPS) move in a favourable direction by 67% each year (using a line of best fit). Its revenue is up 36% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.
Has Etsy, Inc. Been A Good Investment?
I think that the total shareholder return of 537%, over three years, would leave most Etsy, 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.
It appears that Etsy, Inc. remunerates its CEO below most similar sized companies.
Since the business is growing, many would argue this suggests the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Josh Silverman deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. The cherry on top would be if company insiders are buying shares with their own money. Shifting gears from CEO pay for a second, we’ve picked out 2 warning signs for Etsy that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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