Does NantKwest, Inc.'s (NASDAQ:NK) CEO Pay Reflect Performance?
In 2015 Patrick Soon-Shiong was appointed CEO of NantKwest, Inc. (NASDAQ:NK). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
View our latest analysis for NantKwest
How Does Patrick Soon-Shiong's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that NantKwest, Inc. has a market cap of US$114m, and reported total annual CEO compensation of US$909k for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$638k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$496k.
It would therefore appear that NantKwest, Inc. pays Patrick Soon-Shiong 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.
You can see a visual representation of the CEO compensation at NantKwest, below.
Is NantKwest, Inc. Growing?
Over the last three years NantKwest, Inc. has grown its earnings per share (EPS) by an average of 14% per year (using a line of best fit). In the last year, its revenue is up 107%.
This demonstrates that the company has been improving recently. A good result. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has NantKwest, Inc. Been A Good Investment?
Since shareholders would have lost about 85% over three years, some NantKwest, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We compared total CEO remuneration at NantKwest, 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 we must not forget that the EPS growth has been very strong 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. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling NantKwest (free visualization of insider trades).
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
