Patrick Mahaffy has been the CEO of Clovis Oncology, Inc. (NASDAQ:CLVS) since 2009. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Patrick Mahaffy's Compensation Compare With Similar Sized Companies?
According to our data, Clovis Oncology, Inc. has a market capitalization of US$219m, and paid its CEO total annual compensation worth US$6.3m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$689k. 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$100m to US$400m, and the median CEO total compensation was US$1.2m.
It would therefore appear that Clovis Oncology, Inc. pays Patrick Mahaffy more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Clovis Oncology has changed from year to year.
Is Clovis Oncology, Inc. Growing?
Clovis Oncology, Inc. has increased its earnings per share (EPS) by an average of 16% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 57%.
This demonstrates that the company has been improving recently. A good result. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. It could be important to check this free visual depiction of what analysts expect for the future.
Has Clovis Oncology, Inc. Been A Good Investment?
Given the total loss of 89% over three years, many shareholders in Clovis Oncology, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Clovis Oncology, Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Shareholders may want to check for free if Clovis Oncology insiders are buying or selling shares.
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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