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This article will reflect on the compensation paid to Nadav Kidron who has served as CEO of Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) since 2006. This analysis will also assess whether Oramed Pharmaceuticals pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Oramed Pharmaceuticals Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Oramed Pharmaceuticals Inc. has a market capitalization of US$95m, and reported total annual CEO compensation of US$1.6m for the year to August 2019. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$419k.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$877k. Hence, we can conclude that Nadav Kidron is remunerated higher than the industry median. What's more, Nadav Kidron holds US$3.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 27% of total compensation out of all the companies we analyzed, while other remuneration made up 73% of the pie. There isn't a significant difference between Oramed Pharmaceuticals and the broader market, in terms of salary allocation in the overall compensation package. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Oramed Pharmaceuticals Inc.'s Growth Numbers
Over the past three years, Oramed Pharmaceuticals Inc. has seen its earnings per share (EPS) grow by 6.7% per year. Its revenue is up 2.7% over the last year.
We're not particularly impressed by the revenue growth, but we're happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Oramed Pharmaceuticals Inc. Been A Good Investment?
Given the total shareholder loss of 50% over three years, many shareholders in Oramed Pharmaceuticals Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, Oramed Pharmaceuticals Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The growth in the business has been uninspiring, but the shareholder returns for Oramed Pharmaceuticals have arguably been worse, over the last three years. And the situation doesn't look all that good when you see Nadav is remunerated higher than the industry average. All things considered, we believe shareholders would be disappointed to see Nadav's compensation grow without first seeing an improvement in the performance of the company.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 6 warning signs for Oramed Pharmaceuticals you should be aware of, and 1 of them doesn't sit too well with us.
Important note: Oramed Pharmaceuticals is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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