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Shareholders will probably not be too impressed with the underwhelming results at Geron Corporation (NASDAQ:GERN) recently. At the upcoming AGM on 11 May 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.
How Does Total Compensation For Chip Scarlett Compare With Other Companies In The Industry?
Our data indicates that Geron Corporation has a market capitalization of US$455m, and total annual CEO compensation was reported as US$1.9m for the year to December 2020. That's slightly lower by 3.3% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$714k.
In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$2.1m. This suggests that Geron remunerates its CEO largely in line with the industry average. What's more, Chip Scarlett holds US$179k worth of shares in the company in their own name.
Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. It's interesting to note that Geron pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Geron Corporation's Growth Numbers
Over the last three years, Geron Corporation has shrunk its earnings per share by 30% per year. Its revenue is down 45% over the previous year.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Geron Corporation Been A Good Investment?
The return of -62% over three years would not have pleased Geron Corporation shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 4 warning signs for Geron you should be aware of, and 2 of them can't be ignored.
Switching gears from Geron, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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.
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