Yahoo Finance This Is Why Geron Corporation's (NASDAQ:GERN) CEO Compensation Looks Appropriate
Key Insights
Geron to hold its Annual General Meeting on 9th of May
Total pay for CEO Chip Scarlett includes US$787.0k salary
The total compensation is 31% less than the average for the industry
Geron's total shareholder return over the past three years was 197% while its EPS was down 2.8% over the past three years
Performance at Geron Corporation (NASDAQ:GERN) has been rather uninspiring recently and shareholders may be wondering how CEO Chip Scarlett plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 9th of May. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.
View our latest analysis for Geron
How Does Total Compensation For Chip Scarlett Compare With Other Companies In The Industry?
Our data indicates that Geron Corporation has a market capitalization of US$2.3b, and total annual CEO compensation was reported as US$4.9m for the year to December 2023. We note that's an increase of 64% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$787k.
In comparison with other companies in the American Biotechs industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$7.1m. Accordingly, Geron pays its CEO under the industry median. Moreover, Chip Scarlett also holds US$494k worth of Geron stock directly under their own name.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$787k | US$761k | 16% |
Other | US$4.1m | US$2.2m | 84% |
Total Compensation | US$4.9m | US$3.0m | 100% |
On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. Geron pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Geron Corporation's Growth
Geron Corporation has reduced its earnings per share by 2.8% a year over the last three years. It achieved revenue growth of 5.3% over the last year.
A lack of EPS improvement is not good to see. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Geron Corporation Been A Good Investment?
Boasting a total shareholder return of 197% over three years, Geron Corporation has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
To Conclude...
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Geron you should be aware of, and 2 of them shouldn't be ignored.
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
