U.S. Markets closed

How Should Investors React To Cerus Corporation's (NASDAQ:CERS) CEO Pay?

Simply Wall St

Obi Greenman has been the CEO of Cerus Corporation (NASDAQ:CERS) since 2011. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. 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.

Check out our latest analysis for Cerus

How Does Obi Greenman's Compensation Compare With Similar Sized Companies?

According to our data, Cerus Corporation has a market capitalization of US$581m, and paid its CEO total annual compensation worth US$3.0m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$617k. 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$200m to US$800m, and discovered that the median CEO total compensation of that group was US$1.7m.

It would therefore appear that Cerus Corporation pays Obi Greenman more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Cerus, below.

NasdaqGM:CERS CEO Compensation, November 12th 2019

Is Cerus Corporation Growing?

Over the last three years Cerus Corporation has grown its earnings per share (EPS) by an average of 13% per year (using a line of best fit). Its revenue is up 16% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Shareholders might be interested in this free visualization of analyst forecasts.

Has Cerus Corporation Been A Good Investment?

With a three year total loss of 29%, Cerus Corporation would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared total CEO remuneration at Cerus Corporation with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Cerus (free visualization of insider trades).

Important note: Cerus may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.