This post was originally published and is credit to this site
Obi Greenman has been the CEO of Cerus Corporation (NASDAQ:CERS) since 2011, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Cerus Corporation’s CEO Compensation With the industry
Our data indicates that Cerus Corporation has a market capitalization of US$1.1b, and total annual CEO compensation was reported as US$3.3m for the year to December 2019. That’s a notable increase of 9.6% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$645k.
On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$3.1m. So it looks like Cerus compensates Obi Greenman in line with the median for the industry. Furthermore, Obi Greenman directly owns US$5.9m worth of shares in the company, implying that they are deeply invested in the company’s success.
Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. Although there is a difference in how total compensation is set, Cerus more or less reflects the market in terms of setting the salary. It’s important to note that a slant towards non-salary compensation suggests that total pay is tied to the company’s performance.
Cerus Corporation’s Growth
Cerus Corporation’s earnings per share (EPS) grew 7.2% per year over the last three years. It achieved revenue growth of 17% over the last year.
This revenue growth could really point to a brighter future. And the modest growth in EPS isn’t bad, either. Although we’ll stop short of calling the stock a top performer, we think the company has potential. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..
Has Cerus Corporation Been A Good Investment?
Boasting a total shareholder return of 154% over three years, Cerus Corporation has done well by shareholders. 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.
As we touched on above, Cerus Corporation is currently paying a compensation that’s close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, the company’s EPS growth numbers over the last three years is not that impressive. Meanwhile, shareholder returns have remained positive over the same time frame. We would like to see EPS growth from the business, although we wouldn’t say the CEO compensation is high.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We’ve identified 2 warning signs for Cerus that investors should be aware of in a dynamic business environment.
Important note: Cerus 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.
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.