Does Sangamo Therapeutics' (NASDAQ:SGMO) CEO Salary Compare Well With The Performance Of The Company?

By
Simply Wall St
Published
October 27, 2020

Sandy Macrae became the CEO of Sangamo Therapeutics, Inc. (NASDAQ:SGMO) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Sangamo Therapeutics pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Sangamo Therapeutics

Comparing Sangamo Therapeutics, Inc.'s CEO Compensation With the industry

According to our data, Sangamo Therapeutics, Inc. has a market capitalization of US$1.6b, and paid its CEO total annual compensation worth US$4.0m over the year to December 2019. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$662k.

On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$3.6m. From this we gather that Sandy Macrae is paid around the median for CEOs in the industry. Furthermore, Sandy Macrae directly owns US$297k worth of shares in the company.

Component20192018Proportion (2019)
Salary US$662k US$636k 17%
Other US$3.3m US$3.5m 83%
Total CompensationUS$4.0m US$4.1m100%

On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. It's interesting to note that Sangamo Therapeutics allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NasdaqGS:SGMO CEO Compensation October 27th 2020

Sangamo Therapeutics, Inc.'s Growth

Sangamo Therapeutics, Inc. has reduced its earnings per share by 9.2% a year over the last three years. Its revenue is up 47% over the last year.

The decrease in EPS could be a concern for some investors. 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Sangamo Therapeutics, Inc. Been A Good Investment?

Since shareholders would have lost about 11% over three years, some Sangamo Therapeutics, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we noted earlier, Sangamo Therapeutics pays its CEO in line with similar-sized companies belonging to the same industry. But revenue growth seems to be inching northward, a heartening sign for the company. In contrast, over the same time span, shareholder returns are negative. EPS is also not growing, undoubtedly leading to further headaches. We'd say CEO compensation isn't unfair, but shareholders may be wary of a bump in pay before the company substantially improves overall performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Sangamo Therapeutics that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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