Is Immune Pharmaceuticals Inc’s (NASDAQ:IMNP) CEO Salary Justified?
Leading Immune Pharmaceuticals Inc (NASDAQ:IMNP) as the CEO, Elliot Maza took the company to a valuation of USD$14.61M. Recognizing whether CEO incentives are aligned with shareholders is a crucial part of investing. This is because, if incentives are aligned, more value is created for shareholders which directly impacts your returns as an investor. I will break down Maza’s pay and compare this to the company’s performance over the same period, as well as measure it against other US CEOs leading companies of similar size and profitability. Check out our latest analysis for Immune Pharmaceuticals
What has been the trend in IMNP’s earnings?
IMNP can create value to shareholders by increasing its profitability, which in turn is reflected into the share price and the investor’s ability to sell their shares at higher capital gains. In the past year, IMNP released negative earnings of -$26.4M . But this is an improvement on prior year’s loss of -$37.1M, which may signal a turnaround since IMNP has been loss-making for the past five years, on average, with an EPS of -$17.13. Given earnings are moving the right way, CEO pay should be reflective of Maza’s value creation for shareholders. During the same period, Maza’s total compensation declined by a significant rate of -31.63%, to $93,289.
What’s a reasonable CEO compensation?
Though no standard benchmark exists, since compensation should be tailored to the specific company and market, we can gauge a high-level yardstick to see if IMNP is an outlier. This outcome helps investors ask the right question about Maza’s incentive alignment. On average, a US small-cap is worth around $1B, creates earnings of $96M, and remunerates its CEO at roughly $2.7M per annum. Typically I’d use market cap and profit as factors determining performance, however, IMNP’s negative earnings reduces the usefulness of my formula. Analyzing the range of remuneration for small-cap executives, it seems like Maza is remunerated sensibly relative to peers. On the whole, although IMNP is unprofitable, it seems like the CEO’s pay is sound.
What this means for you:
Are you a shareholder? Hopefully this article has given you insight on how shareholders should think about IMNP’s governance policies such as CEO pay. As an investor, you have the right to understand how the board thinks about management incentives, and also the right to vote for and against substantial CEO pay changes. Governance is a big factor in investing, and I encourage you to dig deeper into those that represent your voice on the board. To find out more about IMNP’s governance, look through our infographic report of the company’s board and management.
Are you a potential investor? Board members are the voice of shareholders. Although CEO pay doesn’t necessarily make a big dent in your investment thesis in IMNP, proper governance on behalf of your investment should be a key concern. These decisions made by top management and directors flow down into financials which impact returns to investors. To research more about these fundamentals, I recommend you check out our simple infographic report on IMNP’s financial metrics.
PS. If you are not interested in Immune Pharmaceuticals anymore, you can use our free platform to see my list of over 50 sustainable companies producing great returns.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
