In 2010 Nick Leschly was appointed CEO of bluebird bio, Inc. (NASDAQ:BLUE). 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Nick Leschly’s Compensation Compare With Similar Sized Companies?
According to our data, bluebird bio, Inc. has a market capitalization of US$5.0b, and paid its CEO total annual compensation worth US$24m over the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$610k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$6.4m.
As you can see, Nick Leschly is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean bluebird bio, Inc. is paying too much. 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, below, how CEO compensation at bluebird bio has changed over time.
Is bluebird bio, Inc. Growing?
Over the last three years bluebird bio, Inc. has shrunk its earnings per share by an average of 24% per year (measured with a line of best fit). Its revenue is up 36% over last year.
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. It’s hard to reach a conclusion about business performance right now. This may be one to watch. You might want to check this free visual report on analyst forecasts for future earnings.
Has bluebird bio, Inc. Been A Good Investment?
bluebird bio, Inc. has generated a total shareholder return of 19% over three years, so most shareholders would be reasonably content. 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 examined the amount bluebird bio, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. So it’s certainly hard to argue that the CEO is modestly paid, although we don’t see the remuneration as an issue. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at bluebird bio.
Important note: bluebird bio 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.
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