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Chip Scarlett became the CEO of Geron Corporation (NASDAQ:GERN) in 2011, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Geron pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Chip Scarlett Compare With Other Companies In The Industry?
According to our data, Geron Corporation has a market capitalization of US$525m, and paid its CEO total annual compensation worth US$1.9m over the year to December 2019. That's a notable decrease of 30% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$690k.
On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$2.3m. This suggests that Geron remunerates its CEO largely in line with the industry average. Furthermore, Chip Scarlett directly owns US$211k worth of shares in the company.
Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. According to our research, Geron has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Geron Corporation's Growth
Over the last three years, Geron Corporation has shrunk its earnings per share by 32% per year. In the last year, its revenue is down 43%.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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?
With a three year total loss of 17% for the shareholders, Geron Corporation would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we touched on above, Geron Corporation 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. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Geron (2 are concerning!) that you should be aware of before investing here.
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.
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