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The performance at Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) has been quite strong recently and CEO Nadav Kidron has played a role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 30 August 2021. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.
How Does Total Compensation For Nadav Kidron Compare With Other Companies In The Industry?
At the time of writing, our data shows that Oramed Pharmaceuticals Inc. has a market capitalization of US$515m, and reported total annual CEO compensation of US$1.8m for the year to August 2020. That's a notable increase of 14% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$439k.
For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$2.0m. This suggests that Oramed Pharmaceuticals remunerates its CEO largely in line with the industry average. What's more, Nadav Kidron holds US$10m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 28% of total compensation represents salary, while the remainder of 72% is other remuneration. Oramed Pharmaceuticals sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Oramed Pharmaceuticals Inc.'s Growth Numbers
Oramed Pharmaceuticals Inc.'s earnings per share (EPS) grew 15% per year over the last three years. In the last year, its revenue changed by just 0.3%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Oramed Pharmaceuticals Inc. Been A Good Investment?
Boasting a total shareholder return of 230% over three years, Oramed Pharmaceuticals Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
Given the improved performance, shareholders may be more forgiving of CEO compensation in the upcoming AGM. However, despite the strong growth in earnings and share price growth, the focus for shareholders would be how the company plans to steer the company towards sustainable profitability in the near future.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 4 warning signs for Oramed Pharmaceuticals that investors should look into moving forward.
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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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