What We Learned About CytomX Therapeutics' (NASDAQ:CTMX) CEO Compensation
This article will reflect on the compensation paid to Sean McCarthy who has served as CEO of CytomX Therapeutics, Inc. (NASDAQ:CTMX) since 2011. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for CytomX Therapeutics
How Does Total Compensation For Sean McCarthy Compare With Other Companies In The Industry?
According to our data, CytomX Therapeutics, Inc. has a market capitalization of US$319m, and paid its CEO total annual compensation worth US$3.8m over the year to December 2019. That's a notable decrease of 31% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$575k.
On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$2.2m. Hence, we can conclude that Sean McCarthy is remunerated higher than the industry median. Furthermore, Sean McCarthy directly owns US$731k worth of shares in the company.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$575k | US$550k | 15% |
Other | US$3.2m | US$4.9m | 85% |
Total Compensation | US$3.8m | US$5.5m | 100% |
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. CytomX Therapeutics sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
CytomX Therapeutics, Inc.'s Growth
Over the last three years, CytomX Therapeutics, Inc. has shrunk its earnings per share by 11% per year. Its revenue is up 36% over the last year.
Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has CytomX Therapeutics, Inc. Been A Good Investment?
Since shareholders would have lost about 68% over three years, some CytomX Therapeutics, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As previously discussed, Sean is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Meanwhile, the company has been unable to show any EPS growth, and shareholder returns are also in the red. On the bright side, at lease revenue growth seems to be marching northward. Few would argue that it's wise for the company to pay any more, before returns improve.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for CytomX Therapeutics (1 makes us a bit uncomfortable!) that you should be aware of before investing here.
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.
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