Yahoo Finance Why Albireo Pharma's (NASDAQ:ALBO) CEO Pay Matters
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This article will reflect on the compensation paid to Ron Cooper who has served as CEO of Albireo Pharma, Inc. (NASDAQ:ALBO) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Albireo Pharma.
Check out our latest analysis for Albireo Pharma
Comparing Albireo Pharma, Inc.'s CEO Compensation With the industry
Our data indicates that Albireo Pharma, Inc. has a market capitalization of US$377m, and total annual CEO compensation was reported as US$3.0m for the year to December 2019. Notably, that's a decrease of 17% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$551k.
In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$2.3m. So it looks like Albireo Pharma compensates Ron Cooper in line with the median for the industry. Moreover, Ron Cooper also holds US$221k worth of Albireo Pharma stock directly under their own name.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$551k | US$530k | 18% |
Other | US$2.4m | US$3.1m | 82% |
Total Compensation | US$3.0m | US$3.6m | 100% |
Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. Albireo Pharma pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Albireo Pharma, Inc.'s Growth Numbers
Albireo Pharma, Inc. has reduced its earnings per share by 2.1% a year over the last three years. In the last year, its revenue is up 402%.
The decrease in earnings could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Albireo Pharma, Inc. Been A Good Investment?
Since shareholders would have lost about 6.1% over three years, some Albireo Pharma, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As we touched on above, Albireo Pharma, Inc. 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, revenues have increased over the past year, a positive sign for the company. Contrarily, shareholder returns are in the red over the same stretch. EPS growth is bleak as well, adding fuel to the fire. Overall, we wouldn't say CEO is highly paid, but shareholders might not go for a raise before business metrics start to improve precipitously.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Albireo Pharma that you should be aware of before investing.
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.
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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