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In 2017, Nigel Theobald was appointed CEO of N4 Pharma Plc (LON:N4P). 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. 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.
How Does Nigel Theobald's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that N4 Pharma Plc has a market cap of UK£7.8m, and reported total annual CEO compensation of UK£70k for the year to December 2019. It is worth noting that the CEO compensation consists almost entirely of the salary, worth UK£70k. We examined a group of similar sized companies, with market capitalizations of below UK£164m. The median CEO total compensation in that group is UK£276k.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 41% of total compensation out of all the companies we analysed, while other remuneration made up 59% of the pie. At the company level, N4 Pharma pays Nigel Theobald solely through a salary, preferring to go down a conventional route.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. The graphic below shows how CEO compensation at N4 Pharma has changed from year to year.
Is N4 Pharma Plc Growing?
N4 Pharma Plc has seen earnings per share (EPS) move positively by an average of 21% a year, over the last three years (using a line of best fit). It saw its revenue drop 89% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.
Has N4 Pharma Plc Been A Good Investment?
Since shareholders would have lost about 44% over three years, some N4 Pharma Plc shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
It appears that N4 Pharma Plc remunerates its CEO below most similar sized companies.
Considering the underlying business is growing earnings, this would suggest the pay is modest. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. So while we don't think, Nigel Theobald is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out. In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. CEO compensation is an important area to keep your eyes on, but we've also identified 5 warning signs for N4 Pharma (3 are a bit unpleasant!) that you should be aware of before investing here.
If you want to buy a stock that is better than N4 Pharma, this free list of high return, low debt companies is a great place to look.
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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. Thank you for reading.