Is Momenta Pharmaceuticals, Inc.'s (NASDAQ:MNTA) CEO Salary Justified?
Craig Wheeler has been the CEO of Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) since 2006. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Momenta Pharmaceuticals
How Does Craig Wheeler's Compensation Compare With Similar Sized Companies?
Our data indicates that Momenta Pharmaceuticals, Inc. is worth US$3.4b, and total annual CEO compensation was reported as US$4.6m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$750k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.6m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. Momenta Pharmaceuticals does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.
So Craig Wheeler is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance. The graphic below shows how CEO compensation at Momenta Pharmaceuticals has changed from year to year.
Is Momenta Pharmaceuticals, Inc. Growing?
Momenta Pharmaceuticals, Inc. has reduced its earnings per share by an average of 53% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down 68%.
Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Momenta Pharmaceuticals, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Momenta Pharmaceuticals, Inc. for providing a total return of 124% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
Craig Wheeler is paid around the same as most CEOs of similar size companies.
We feel that earnings per share have been a bit disappointing, but it's nice to see positive shareholder returns over the last three years. So we can't see a reason to suggest the pay is inappropriate. Looking into other areas, we've picked out 3 warning signs for Momenta Pharmaceuticals that investors should think about before committing capital to this stock.
If you want to buy a stock that is better than Momenta Pharmaceuticals, this free list of high return, low debt companies is a great place to look.
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.
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. Thank you for reading.
