We Think The Compensation For Sutro Biopharma, Inc.'s (NASDAQ:STRO) CEO Looks About Right

Key Insights

• Sutro Biopharma to hold its Annual General Meeting on 6th of June
• Salary of US$686.7k is part of CEO Bill Newell's total remuneration
• Total compensation is 33% below industry average
• Over the past three years, Sutro Biopharma's EPS fell by 4.2% and over the past three years, the total loss to shareholders 77%

The performance at Sutro Biopharma, Inc. (NASDAQ:STRO) has been rather lacklustre of late and shareholders may be wondering what CEO Bill Newell is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 6th of June. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Sutro Biopharma

Comparing Sutro Biopharma, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Sutro Biopharma, Inc. has a market capitalization of US$354m, and reported total annual CEO compensation of US$2.1m for the year to December 2023. We note that's a decrease of 30% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$687k.

For comparison, other companies in the American Biotechs industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$3.2m. In other words, Sutro Biopharma pays its CEO lower than the industry median. Moreover, Bill Newell also holds US$1.5m worth of Sutro Biopharma stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	US$687k	US$663k	32%
Other	US$1.4m	US$2.4m	68%
Total Compensation	US$2.1m	US$3.0m	100%

On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. It's interesting to note that Sutro Biopharma pays out a greater portion of remuneration through salary, compared to the industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Sutro Biopharma, Inc.'s Growth

Over the last three years, Sutro Biopharma, Inc. has shrunk its earnings per share by 4.2% per year. It achieved revenue growth of 107% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Sutro Biopharma, Inc. Been A Good Investment?

The return of -77% over three years would not have pleased Sutro Biopharma, Inc. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The loss to shareholders over the past three years is certainly concerning. The fact that earnings growth has gone backwards could be a factor for the downward trend in the share price. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Sutro Biopharma that you should be aware of before investing.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.