Is Intuitive Surgical, Inc.’s (NASDAQ:ISRG) CEO Paid Enough Relative To Peers?

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Gary Guthart has been the CEO of Intuitive Surgical, Inc. (NASDAQ:ISRG) since 2010. First, this article will compare CEO compensation with compensation at other large companies. Then we’ll look at a snap shot of the business growth. 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.

See our latest analysis for Intuitive Surgical

How Does Gary Guthart’s Compensation Compare With Similar Sized Companies?

Our data indicates that Intuitive Surgical, Inc. is worth US$60b, and total annual CEO compensation is US$6.4m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$767k. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

This would give shareholders a good impression of the company, since most large companies 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, below, how CEO compensation at Intuitive Surgical has changed over time.

NasdaqGS:ISRG CEO Compensation, July 17th 2019
NasdaqGS:ISRG CEO Compensation, July 17th 2019

Is Intuitive Surgical, Inc. Growing?

On average over the last three years, Intuitive Surgical, Inc. has grown earnings per share (EPS) by 15% each year (using a line of best fit). In the last year, its revenue is up 16%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.

Has Intuitive Surgical, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Intuitive Surgical, Inc. for providing a total return of 130% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

It appears that Intuitive Surgical, Inc. remunerates its CEO below most large companies. Many would consider this to indicate that the pay is modest since the business is growing. And given most shareholders are probably very happy with recent returns, you might even think that Gary Guthart deserves a raise!

Most shareholders like to see a modestly paid CEO combined with strong performance by the company. But it is even better if company insiders are also buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Intuitive Surgical.

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.

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.