A. Kazimi has been the CEO of Cumberland Pharmaceuticals Inc. (NASDAQ:CPIX) since 1999. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does A. Kazimi's Compensation Compare With Similar Sized Companies?
Our data indicates that Cumberland Pharmaceuticals Inc. is worth US$54m, and total annual CEO compensation was reported as US$1.5m for the year to December 2019. That's just a smallish increase of 0.1% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$567k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$604k.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Cumberland Pharmaceuticals stands. On a sector level, around 28% of total compensation represents salary and 72% is other remuneration. According to our research, Cumberland Pharmaceuticals has allocated a higher percentage of pay to salary in comparison to the broader sector.
Thus we can conclude that A. Kazimi receives more in total compensation than the median of a group of companies in the same market, and of similar size to Cumberland Pharmaceuticals Inc.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. The graphic below shows how CEO compensation at Cumberland Pharmaceuticals has changed from year to year.
Is Cumberland Pharmaceuticals Inc. Growing?
Over the last three years Cumberland Pharmaceuticals Inc. has seen earnings per share (EPS) move in a positive direction by an average of 12% per year (using a line of best fit). Its revenue is up 6.9% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. You might want to check this free visual report on analyst forecasts for future earnings.
Has Cumberland Pharmaceuticals Inc. Been A Good Investment?
Given the total loss of 49% over three years, many shareholders in Cumberland Pharmaceuticals Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by Cumberland Pharmaceuticals Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. 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. Moving away from CEO compensation for the moment, we've identified 3 warning signs for Cumberland Pharmaceuticals that you should be aware of before investing.
Important note: Cumberland Pharmaceuticals may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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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. Thank you for reading.