Yahoo Finance Is Vertex Pharmaceuticals Incorporated’s (NASDAQ:VRTX) CEO Being Overpaid?
Jeffrey Leiden has been the CEO of Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) since 2012. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
View our latest analysis for Vertex Pharmaceuticals
How Does Jeffrey Leiden’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Vertex Pharmaceuticals Incorporated has a market cap of US$44b, and is paying total annual CEO compensation of US$17m. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.3m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
Thus we can conclude that Jeffrey Leiden receives more in total compensation than the median of a group of large companies in the same market as Vertex Pharmaceuticals Incorporated. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Vertex Pharmaceuticals, below.
Is Vertex Pharmaceuticals Incorporated Growing?
On average over the last three years, Vertex Pharmaceuticals Incorporated has grown earnings per share (EPS) by 117% each year (using a line of best fit). Its revenue is up 23% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business.
It could be important to check this free visual depiction of what analysts expect for the future.
Has Vertex Pharmaceuticals Incorporated Been A Good Investment?
Most shareholders would probably be pleased with Vertex Pharmaceuticals Incorporated for providing a total return of 69% over three years. 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…
We compared total CEO remuneration at Vertex Pharmaceuticals Incorporated with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Vertex Pharmaceuticals (free visualization of insider trades).
Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
