Michel Vounatsos became the CEO of Biogen Inc. (NASDAQ:BIIB) in 2017. First, this article will compare CEO compensation with compensation at other large companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Michel Vounatsos's Compensation Compare With Similar Sized Companies?
Our data indicates that Biogen Inc. is worth US$44b, and total annual CEO compensation is US$16m. (This figure is for the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.3m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
As you can see, Michel Vounatsos is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Biogen Inc. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Biogen, below.
Is Biogen Inc. Growing?
Over the last three years Biogen Inc. has grown its earnings per share (EPS) by an average of 12% per year (using a line of best fit). In the last year, its revenue is up 9.3%.
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. It could be important to check this free visual depiction of what analysts expect for the future.
Has Biogen Inc. Been A Good Investment?
Since shareholders would have lost about 15% over three years, some Biogen Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
We examined the amount Biogen Inc. pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. 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. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Biogen.
Important note: Biogen 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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