We Discuss Whether Etsy, Inc.'s (NASDAQ:ETSY) CEO Is Due For A Pay Rise

By
Simply Wall St
Published
June 04, 2021
NasdaqGS:ETSY
Source: Shutterstock

The impressive results at Etsy, Inc. (NASDAQ:ETSY) recently will be great news for shareholders. At the upcoming AGM on 11 June 2021, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

View our latest analysis for Etsy

Comparing Etsy, Inc.'s CEO Compensation With the industry

According to our data, Etsy, Inc. has a market capitalization of US$21b, and paid its CEO total annual compensation worth US$1.9m over the year to December 2020. We note that's an increase of 79% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$575k.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$3.0m. In other words, Etsy pays its CEO lower than the industry median. Moreover, Josh Silverman also holds US$11m worth of Etsy stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$575k US$475k 30%
Other US$1.4m US$608k 70%
Total CompensationUS$1.9m US$1.1m100%

On an industry level, roughly 25% of total compensation represents salary and 75% is other remuneration. It's interesting to note that Etsy pays out a greater portion of remuneration through salary, compared to the industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NasdaqGS:ETSY CEO Compensation June 5th 2021

Etsy, Inc.'s Growth

Over the past three years, Etsy, Inc. has seen its earnings per share (EPS) grow by 70% per year. In the last year, its revenue is up 134%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Etsy, Inc. Been A Good Investment?

Boasting a total shareholder return of 394% over three years, Etsy, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Etsy that investors should be aware of in a dynamic business environment.

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.

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