In 1999 Justin Gover was appointed CEO of GW Pharmaceuticals plc (NASDAQ:GWPH). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Justin Gover's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that GW Pharmaceuticals plc has a market cap of US$2.4b, and reported total annual CEO compensation of US$566k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$140k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.5m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 34% of total compensation represents salary and 66% is other remuneration. So it seems like there isn't a significant difference between GW Pharmaceuticals and the broader market, in terms of salary allocation in the overall compensation package.
Most shareholders would consider it a positive that Justin Gover takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see a visual representation of the CEO compensation at GW Pharmaceuticals, below.
Is GW Pharmaceuticals plc Growing?
GW Pharmaceuticals plc has increased its earnings per share (EPS) by an average of 11% a year, over the last three years (using a line of best fit). Its revenue is up 1922% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.
Has GW Pharmaceuticals plc Been A Good Investment?
Given the total loss of 35% over three years, many shareholders in GW Pharmaceuticals plc are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
It appears that GW Pharmaceuticals plc remunerates its CEO below most similar sized companies.
Considering the underlying business is growing earnings, this would suggest the pay is modest. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. We're not critical of the remuneration Justin Gover receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. Looking into other areas, we've picked out 2 warning signs for GW Pharmaceuticals that investors should think about before committing capital to this stock.
If you want to buy a stock that is better than GW Pharmaceuticals, this free list of high return, low debt companies is a great place to look.
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