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How Should Investors Feel About Affimed's (NASDAQ:AFMD) CEO Remuneration?

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Adi Hoess has been the CEO of Affimed N.V. (NASDAQ:AFMD) since 2011, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Affimed.

Check out our latest analysis for Affimed

Comparing Affimed N.V.'s CEO Compensation With the industry

At the time of writing, our data shows that Affimed N.V. has a market capitalization of US$270m, and reported total annual CEO compensation of €1.3m for the year to December 2019. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at €474k.

On comparing similar companies from the same industry with market caps ranging from US$100m to US$400m, we found that the median CEO total compensation was €1.4m. This suggests that Affimed remunerates its CEO largely in line with the industry average.

Component

2019

2018

Proportion (2019)

Salary

€474k

€462k

36%

Other

€842k

€890k

64%

Total Compensation

€1.3m

€1.4m

100%

On an industry level, around 24% of total compensation represents salary and 76% is other remuneration. It's interesting to note that Affimed pays out a greater portion of remuneration through salary, compared to the industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at Affimed N.V.'s Growth Numbers

Affimed N.V. has seen its earnings per share (EPS) increase by 22% a year over the past three years. In the last year, its revenue is down 63%.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in 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 Affimed N.V. Been A Good Investment?

Most shareholders would probably be pleased with Affimed N.V. for providing a total return of 52% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As we touched on above, Affimed N.V. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company is growing EPS and total shareholder returns have been pleasing. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.

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 3 warning signs for Affimed 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@simplywallst.com.