Here's Why We Think Synlogic, Inc.'s (NASDAQ:SYBX) CEO Compensation Looks Fair

Shareholders may be wondering what CEO Aoife Brennan plans to do to improve the less than great performance at Synlogic, Inc. (NASDAQ:SYBX) recently. At the next AGM coming up on 10 June 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. 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 think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for Synlogic

How Does Total Compensation For Aoife Brennan Compare With Other Companies In The Industry?

At the time of writing, our data shows that Synlogic, Inc. has a market capitalization of US$187m, and reported total annual CEO compensation of US$1.1m for the year to December 2020. That's a notable decrease of 39% on last year. We note that the salary of US$550.0k makes up a sizeable portion of the total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$1.7m. That is to say, Aoife Brennan is paid under the industry median. Moreover, Aoife Brennan also holds US$635k worth of Synlogic stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	US$550k	US$505k	50%
Other	US$545k	US$1.3m	50%
Total Compensation	US$1.1m	US$1.8m	100%

On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. Synlogic pays out 50% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Synlogic, Inc.'s Growth

Synlogic, Inc. has seen its earnings per share (EPS) increase by 26% a year over the past three years. It saw its revenue drop 78% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Synlogic, Inc. Been A Good Investment?

Few Synlogic, Inc. shareholders would feel satisfied with the return of -64% over three years. 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 share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key focus for the board and management will be how to align the share price with fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Synlogic you should be aware of, and 3 of them can't be ignored.

Switching gears from Synlogic, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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