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How Should Investors React To BeiGene's (NASDAQ:BGNE) CEO Pay?

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John Oyler became the CEO of BeiGene, Ltd. (NASDAQ:BGNE) in 2010, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for BeiGene.

Check out our latest analysis for BeiGene

How Does Total Compensation For John Oyler Compare With Other Companies In The Industry?

At the time of writing, our data shows that BeiGene, Ltd. has a market capitalization of US$27b, and reported total annual CEO compensation of US$13m for the year to December 2019. We note that's a decrease of 55% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$675k.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$17m. From this we gather that John Oyler is paid around the median for CEOs in the industry. Moreover, John Oyler also holds US$1.3b worth of BeiGene stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2019

2018

Proportion (2019)

Salary

US$675k

US$650k

5%

Other

US$12m

US$27m

95%

Total Compensation

US$13m

US$28m

100%

On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. BeiGene sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

BeiGene, Ltd.'s Growth

Over the last three years, BeiGene, Ltd. has shrunk its earnings per share by 61% per year. It saw its revenue drop 48% over the last year.

Few shareholders would be pleased to read that EPS have declined. 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. 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 BeiGene, Ltd. Been A Good Investment?

Most shareholders would probably be pleased with BeiGene, Ltd. for providing a total return of 220% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As we touched on above, BeiGene, Ltd. 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. Some investors may take issue with this, especially considering shrinking EPS for the past three years. On the other hand, shareholder returns are showing positive trends over the same time frame. We're not saying CEO compensation is too generous, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 4 warning signs for BeiGene that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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.