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How Does CareDx's (NASDAQ:CDNA) CEO Pay Compare With Company Performance?

Simply Wall St
·3 min read

This article will reflect on the compensation paid to Peter Maag who has served as CEO of CareDx, Inc (NASDAQ:CDNA) since 2012. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for CareDx.

See our latest analysis for CareDx

How Does Total Compensation For Peter Maag Compare With Other Companies In The Industry?

According to our data, CareDx, Inc has a market capitalization of US$1.6b, and paid its CEO total annual compensation worth US$9.4m over the year to December 2019. That's a notable increase of 80% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$510k.

In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$4.4m. Accordingly, our analysis reveals that CareDx, Inc pays Peter Maag north of the industry median. Moreover, Peter Maag also holds US$6.3m worth of CareDx stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2019

2018

Proportion (2019)

Salary

US$510k

US$484k

5%

Other

US$8.9m

US$4.7m

95%

Total Compensation

US$9.4m

US$5.2m

100%

Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. CareDx pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

CareDx, Inc's Growth

Over the past three years, CareDx, Inc has seen its earnings per share (EPS) grow by 38% per year. In the last year, its revenue is up 57%.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 CareDx, Inc Been A Good Investment?

Boasting a total shareholder return of 2,263% over three years, CareDx, Inc has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As previously discussed, Peter is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, CareDx has produced strong earnings growth and shareholder returns over the last three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. And given most shareholders are probably very happy with recent returns, they might even think that Peter deserves a raise!

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for CareDx that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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.