J. Kim became the CEO of Inovio Pharmaceuticals, Inc. (NASDAQ:INO) in 2009. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does J. Kim's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Inovio Pharmaceuticals, Inc. has a market cap of US$1.2b, and reported total annual CEO compensation of US$3.1m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$727k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$3.2m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Inovio Pharmaceuticals stands. Talking in terms of the sector, salary represented approximately 22% of total compensation out of all the companies we analysed, while other remuneration made up 78% of the pie. Our data reveals that Inovio Pharmaceuticals allocates salary in line with the wider market.
That means J. Kim receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. You can see, below, how CEO compensation at Inovio Pharmaceuticals has changed over time.
Is Inovio Pharmaceuticals, Inc. Growing?
Over the last three years Inovio Pharmaceuticals, Inc. has shrunk its earnings per share by an average of 1.5% per year (measured with a line of best fit). It saw its revenue drop 87% over the last year.
In the last three years the company has failed to grow earnings per share. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has Inovio Pharmaceuticals, Inc. Been A Good Investment?
Inovio Pharmaceuticals, Inc. has served shareholders reasonably well, with a total return of 28% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
J. Kim is paid around what is normal for the leaders of comparable size companies.
The company isn't growing earnings per share, and nor have the total returns inspired us. We wouldn't say the CEO pay is too high, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. On another note, Inovio Pharmaceuticals has 5 warning signs (and 1 which doesn't sit too well with us) we think you should know about.
If you want to buy a stock that is better than Inovio Pharmaceuticals, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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