In 2007 Howard Robin was appointed CEO of Nektar Therapeutics (NASDAQ:NKTR). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Howard Robin's Compensation Compare With Similar Sized Companies?
According to our data, Nektar Therapeutics has a market capitalization of US$5.6b, and pays its CEO total annual compensation worth US$13m. (This figure is for the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$969k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.9m.
It would therefore appear that Nektar Therapeutics pays Howard Robin 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. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Nektar Therapeutics has changed from year to year.
Is Nektar Therapeutics Growing?
Over the last three years Nektar Therapeutics has grown its earnings per share (EPS) by an average of 104% per year (using a line of best fit). In the last year, its revenue is up 269%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Shareholders might be interested in this free visualization of analyst forecasts.
Has Nektar Therapeutics Been A Good Investment?
Most shareholders would probably be pleased with Nektar Therapeutics for providing a total return of 109% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at Nektar Therapeutics 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, the earnings per share growth over three years is certainly impressive. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. So you may want to check if insiders are buying Nektar Therapeutics shares with their own money (free access).
If you want to buy a stock that is better than Nektar Therapeutics, this free list of high return, low debt companies is a great place to look.
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