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Here's Why Shareholders May Want To Be Cautious With Increasing Amphastar Pharmaceuticals, Inc.'s (NASDAQ:AMPH) CEO Pay Packet

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Under the guidance of CEO Jack Zhang, Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 07 June 2021. However, some shareholders will still be cautious of paying the CEO excessively.

Check out our latest analysis for Amphastar Pharmaceuticals

Comparing Amphastar Pharmaceuticals, Inc.'s CEO Compensation With the industry

According to our data, Amphastar Pharmaceuticals, Inc. has a market capitalization of US$901m, and paid its CEO total annual compensation worth US$6.0m over the year to December 2020. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$898k.

On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$2.5m. This suggests that Jack Zhang is paid more than the median for the industry. Furthermore, Jack Zhang directly owns US$39m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2020

2019

Proportion (2020)

Salary

US$898k

US$898k

15%

Other

US$5.1m

US$5.1m

85%

Total Compensation

US$6.0m

US$6.0m

100%

On an industry level, around 28% of total compensation represents salary and 72% is other remuneration. Amphastar Pharmaceuticals sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

A Look at Amphastar Pharmaceuticals, Inc.'s Growth Numbers

Over the past three years, Amphastar Pharmaceuticals, Inc. has seen its earnings per share (EPS) grow by 31% per year. In the last year, its revenue is up 13%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and 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 Amphastar Pharmaceuticals, Inc. Been A Good Investment?

Amphastar Pharmaceuticals, Inc. has served shareholders reasonably well, with a total return of 14% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

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 4 warning signs for Amphastar Pharmaceuticals that investors should think about before committing capital to this stock.

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.

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 (at) simplywallst.com.