Yahoo Finance Key Things To Understand About Pharmaxis' (ASX:PXS) CEO Pay Cheque
Gary Phillips became the CEO of Pharmaxis Ltd (ASX:PXS) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Pharmaxis
How Does Total Compensation For Gary Phillips Compare With Other Companies In The Industry?
According to our data, Pharmaxis Ltd has a market capitalization of AU$36m, and paid its CEO total annual compensation worth AU$559k over the year to June 2020. Notably, that's a decrease of 8.9% over the year before. We note that the salary portion, which stands at AU$440.4k constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$259m, we found that the median total CEO compensation was AU$414k. This suggests that Gary Phillips is paid more than the median for the industry. What's more, Gary Phillips holds AU$205k worth of shares in the company in their own name.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$440k | AU$433k | 79% |
Other | AU$119k | AU$181k | 21% |
Total Compensation | AU$559k | AU$613k | 100% |
On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. According to our research, Pharmaxis has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Pharmaxis Ltd's Growth Numbers
Over the last three years, Pharmaxis Ltd has shrunk its earnings per share by 33% per year. Its revenue is up 67% over the last year.
Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Pharmaxis Ltd Been A Good Investment?
Given the total shareholder loss of 67% over three years, many shareholders in Pharmaxis Ltd are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As previously discussed, Gary is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. At the same time, looking at EPS and total shareholder returns, it's tough to say Pharmaxis is in a sound position, considering both metrics are down. On a more positive note, the company has produced a more positive revenue growth more recently. Suffice it to say, we don't think the CEO is underpaid!
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Pharmaxis you should be aware of, and 1 of them makes us a bit uncomfortable.
Switching gears from Pharmaxis, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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.
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