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Is Intuitive Surgical, Inc. (NASDAQ:ISRG) Overpaying Its CEO?

Simply Wall St

Gary Guthart became the CEO of Intuitive Surgical, Inc. (NASDAQ:ISRG) in 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Intuitive Surgical

How Does Gary Guthart's Compensation Compare With Similar Sized Companies?

According to our data, Intuitive Surgical, Inc. has a market capitalization of US$62b, and paid its CEO total annual compensation worth US$6.4m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$767k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

The graphic below shows how CEO compensation at Intuitive Surgical has changed from year to year.

NasdaqGS:ISRG CEO Compensation, March 11th 2020

Is Intuitive Surgical, Inc. Growing?

Over the last three years Intuitive Surgical, Inc. has grown its earnings per share (EPS) by an average of 22% per year (using a line of best fit). It achieved revenue growth of 20% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has Intuitive Surgical, Inc. Been A Good Investment?

I think that the total shareholder return of 116%, over three years, would leave most Intuitive Surgical, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

It appears that Intuitive Surgical, Inc. remunerates its CEO below most large companies.

Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Gary Guthart deserves a raise! It is relatively rare to see a modestly paid CEO when performance is so impressive. But it is even better if company insiders are also buying shares with their own money. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Intuitive Surgical (free visualization of insider trades).

Important note: Intuitive Surgical may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.