In 2015 Jeff Nugent was appointed CEO of Sientra, Inc. (NASDAQ:SIEN). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Jeff Nugent’s Compensation Compare With Similar Sized Companies?
According to our data, Sientra, Inc. has a market capitalization of US$441m, and paid its CEO total annual compensation worth US$3.0m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$636k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO total compensation was US$1.7m.
It would therefore appear that Sientra, Inc. pays Jeff Nugent 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. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Sientra, below.
Is Sientra, Inc. Growing?
On average over the last three years, Sientra, Inc. has shrunk earnings per share by 9.1% each year (measured with a line of best fit). Its revenue is up 32% over last year.
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. It’s hard to reach a conclusion about business performance right now. This may be one to watch. Shareholders might be interested in this free visualization of analyst forecasts.
Has Sientra, Inc. Been A Good Investment?
Sientra, Inc. has not done too badly by shareholders, with a total return of 3.5%, over three years. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.
We compared the total CEO remuneration paid by Sientra, Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
One might like to have seen stronger growth, and the shareholder returns have failed to inspire, over the last three years. Considering this, we wouldn’t want to see any big pay rises, although we’d stop short of calling the CEO compensation unfair. Whatever your view on compensation, you might want to check if insiders are buying or selling Sientra 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 firstname.lastname@example.org. 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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