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How Is Biogen's (NASDAQ:BIIB) CEO Compensated?

Simply Wall St
·3 min read

This article will reflect on the compensation paid to Michel Vounatsos who has served as CEO of Biogen Inc. (NASDAQ:BIIB) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Biogen

How Does Total Compensation For Michel Vounatsos Compare With Other Companies In The Industry?

According to our data, Biogen Inc. has a market capitalization of US$44b, and paid its CEO total annual compensation worth US$18m over the year to December 2019. That's a notable increase of 12% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.4m.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$18m. This suggests that Biogen remunerates its CEO largely in line with the industry average. What's more, Michel Vounatsos holds US$8.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2019

2018

Proportion (2019)

Salary

US$1.4m

US$1.3m

8%

Other

US$17m

US$15m

92%

Total Compensation

US$18m

US$16m

100%

Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. Biogen sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

Biogen Inc.'s Growth

Biogen Inc. has seen its earnings per share (EPS) increase by 31% a year over the past three years. Its revenue is up 2.9% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Biogen Inc. Been A Good Investment?

With a three year total loss of 2.6% for the shareholders, Biogen Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we touched on above, Biogen 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. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. However, EPS growth is positive over the same time frame. Considering positive EPS growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Biogen (1 can't be ignored!) that you should be aware of before investing here.

Switching gears from Biogen, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.