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Mark Iwicki became the CEO of Kala Pharmaceuticals, Inc. (NASDAQ:KALA) in 2015, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Mark Iwicki Compare With Other Companies In The Industry?
At the time of writing, our data shows that Kala Pharmaceuticals, Inc. has a market capitalization of US$515m, and reported total annual CEO compensation of US$2.6m for the year to December 2019. That's a notable decrease of 17% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$564k.
On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$2.2m. This suggests that Kala Pharmaceuticals remunerates its CEO largely in line with the industry average.
On an industry level, around 27% of total compensation represents salary and 73% is other remuneration. Kala Pharmaceuticals 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.
Kala Pharmaceuticals, Inc.'s Growth
Over the past three years, Kala Pharmaceuticals, Inc. has seen its earnings per share (EPS) grow by 100% per year. In the last year, its revenue is up 309%.
Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth we like to see. 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 Kala Pharmaceuticals, Inc. Been A Good Investment?
Since shareholders would have lost about 54% over three years, some Kala Pharmaceuticals, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we noted earlier, Kala Pharmaceuticals pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. But earnings growth is moving in a favorable direction, certainly a positive sign. Overall, we wouldn't say Mark is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which doesn't sit too well with us) in Kala Pharmaceuticals we think you should know about.
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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