Is Amarin Corporation plc's (NASDAQ:AMRN) CEO Being Overpaid?
John Thero became the CEO of Amarin Corporation plc (NASDAQ:AMRN) in 2014. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does John Thero's Compensation Compare With Similar Sized Companies?
Our data indicates that Amarin Corporation plc is worth US$5.2b, and total annual CEO compensation is US$4.2m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$660k. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO total compensation of that group was US$6.9m.
A first glance this seems like a real positive for shareholders, since John Thero is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at Amarin has changed from year to year.
Is Amarin Corporation plc Growing?
On average over the last three years, Amarin Corporation plc has grown earnings per share (EPS) by 11% each year (using a line of best fit). It achieved revenue growth of 55% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. It could be important to check this free visual depiction of what analysts expect for the future.
Has Amarin Corporation plc Been A Good Investment?
Most shareholders would probably be pleased with Amarin Corporation plc for providing a total return of 422% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It appears that Amarin Corporation plc remunerates its CEO below most similar sized companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that John Thero deserves a raise!
It's not often we see shareholders do so well, and yet the CEO is paid modestly. It would be even more positive if company insiders are buying shares. Whatever your view on compensation, you might want to check if insiders are buying or selling Amarin shares (free trial).
If you want to buy a stock that is better than Amarin, this free list of high return, low debt companies is a great place to look.
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