Shareholders May Find It Hard To Justify Increasing Sprout Social, Inc.'s (NASDAQ:SPT) CEO Compensation For Now

Key Insights

• Sprout Social will host its Annual General Meeting on 22nd of May
• Salary of US$480.0k is part of CEO Ryan Barretto's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, Sprout Social's EPS fell by 17% and over the past three years, the total loss to shareholders 42%

Our free stock report includes 1 warning sign investors should be aware of before investing in Sprout Social. Read for free now.

Shareholders of Sprout Social, Inc. (NASDAQ:SPT) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also poor, despite revenues growing. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 22nd of May, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Check out our latest analysis for Sprout Social

Comparing Sprout Social, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Sprout Social, Inc. has a market capitalization of US$1.4b, and reported total annual CEO compensation of US$7.5m for the year to December 2024. That's a notable increase of 72% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$480k.

In comparison with other companies in the American Software industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$6.9m. From this we gather that Ryan Barretto is paid around the median for CEOs in the industry. What's more, Ryan Barretto holds US$9.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	US$480k	US$425k	6%
Other	US$7.1m	US$4.0m	94%
Total Compensation	US$7.5m	US$4.4m	100%

On an industry level, roughly 11% of total compensation represents salary and 89% is other remuneration. It's interesting to note that Sprout Social 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.

Sprout Social, Inc.'s Growth

Sprout Social, Inc. has reduced its earnings per share by 17% a year over the last three years. Its revenue is up 18% over the last year.

Investors would be a bit wary of companies that have lower EPS 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Sprout Social, Inc. Been A Good Investment?

The return of -42% over three years would not have pleased Sprout Social, Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Sprout Social that investors should think about before committing capital to this stock.

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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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.