This article will reflect on the compensation paid to Sean Moriarty who has served as CEO of Leaf Group Ltd. (NYSE:LEAF) since 2014. This analysis will also assess whether Leaf Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Leaf Group Ltd.'s CEO Compensation With the industry
Our data indicates that Leaf Group Ltd. has a market capitalization of US$141m, and total annual CEO compensation was reported as US$2.5m for the year to December 2019. That's a notable increase of 9.7% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$400k.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$501k. Accordingly, our analysis reveals that Leaf Group Ltd. pays Sean Moriarty north of the industry median. Furthermore, Sean Moriarty directly owns US$2.3m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Leaf Group pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Leaf Group Ltd.'s Growth
Over the past three years, Leaf Group Ltd. has seen its earnings per share (EPS) grow by 20% per year. In the last year, its revenue is up 7.8%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Leaf Group Ltd. Been A Good Investment?
Given the total shareholder loss of 24% over three years, many shareholders in Leaf Group Ltd. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, Leaf Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, the EPS growth is certainly impressive, but it's disappointing to see negative shareholder returns over the same period. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.
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 Leaf Group that investors should think about before committing capital to this stock.
Important note: Leaf Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
If you decide to trade Leaf Group, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.