In 2014 Brent Saunders was appointed CEO of Allergan plc (NYSE:AGN). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. 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.
How Does Brent Saunders's Compensation Compare With Similar Sized Companies?
Our data indicates that Allergan plc is worth US$48b, and total annual CEO compensation is US$33m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. 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. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
It would therefore appear that Allergan plc pays Brent Saunders more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Allergan, below.
Is Allergan plc Growing?
On average over the last three years, Allergan plc has grown earnings per share (EPS) by 2.2% each year (using a line of best fit). Revenue was pretty flat on last year.
I generally like to see a little revenue growth, but it is good to see EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. You might want to check this free visual report on analyst forecasts for future earnings.
Has Allergan plc Been A Good Investment?
Since shareholders would have lost about 34% over three years, some Allergan plc shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by Allergan plc, and compared it to remuneration at a group of other large companies. As discussed above, we discovered that the company pays more than the median of that group.
Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Considering this, we have the opinion that the CEO pay is more on the generous side, than the modest side. So you may want to check if insiders are buying Allergan 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.
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