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Is Myriad Genetics, Inc.'s (NASDAQ:MYGN) CEO Salary Justified?

Simply Wall St

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Mark Capone has been the CEO of Myriad Genetics, Inc. (NASDAQ:MYGN) since 2015. First, this article will compare CEO compensation with compensation at similar sized companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Myriad Genetics

How Does Mark Capone's Compensation Compare With Similar Sized Companies?

According to our data, Myriad Genetics, Inc. has a market capitalization of US$1.7b, and pays its CEO total annual compensation worth US$7.1m. (This figure is for the year to June 2018). While we always look at total compensation first, we note that the salary component is less, at US$852k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.1m.

As you can see, Mark Capone is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Myriad Genetics, Inc. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Myriad Genetics has changed from year to year.

NasdaqGS:MYGN CEO Compensation, May 30th 2019

Is Myriad Genetics, Inc. Growing?

Myriad Genetics, Inc. has reduced its earnings per share by an average of 20% a year, over the last three years (measured with a line of best fit). Its revenue is up 15% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Myriad Genetics, Inc. Been A Good Investment?

With a three year total loss of 31%, Myriad Genetics, Inc. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount Myriad Genetics, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Myriad Genetics shares (free trial).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.

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. Thank you for reading.