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Does Vermillion, Inc.'s (NASDAQ:VRML) CEO Pay Reflect Performance?

Simply Wall St

Valerie Palmieri became the CEO of Vermillion, Inc. (NASDAQ:VRML) in 2015. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Vermillion

How Does Valerie Palmieri's Compensation Compare With Similar Sized Companies?

According to our data, Vermillion, Inc. has a market capitalization of US$74m, and pays its CEO total annual compensation worth US$684k. (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$375k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$473k.

It would therefore appear that Vermillion, Inc. pays Valerie Palmieri 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 Vermillion, below.

NasdaqCM:VRML CEO Compensation, July 24th 2019

Is Vermillion, Inc. Growing?

Over the last three years Vermillion, Inc. has grown its earnings per share (EPS) by an average of 31% per year (using a line of best fit). In the last year, its revenue is up 5.4%.

This demonstrates that the company has been improving recently. A good result. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. Although we don't have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Vermillion, Inc. Been A Good Investment?

Since shareholders would have lost about 42% over three years, some Vermillion, Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount Vermillion, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark 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. So you may want to check if insiders are buying Vermillion shares with their own money (free access).

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

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.