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Is Pharmaxis Ltd (ASX:PXS) Overpaying Its CEO?

Simply Wall St

Gary Phillips has been the CEO of Pharmaxis Ltd (ASX:PXS) since 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Pharmaxis

How Does Gary Phillips's Compensation Compare With Similar Sized Companies?

Our data indicates that Pharmaxis Ltd is worth AU$79m, and total annual CEO compensation was reported as AU$613k for the year to June 2019. That's actually a decrease on the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$433k. We examined a group of similar sized companies, with market capitalizations of below AU$289m. The median CEO total compensation in that group is AU$378k.

It would therefore appear that Pharmaxis Ltd pays Gary Phillips more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Pharmaxis, below.

ASX:PXS CEO Compensation, November 4th 2019

Is Pharmaxis Ltd Growing?

Pharmaxis Ltd saw earnings per share stay pretty flat over the last three years, albeit with a slight positive trend. Its revenue is down 40% over last year.

I generally like to see a little revenue growth, but I'm happy with the modest EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. It could be important to check this free visual depiction of what analysts expect for the future.

Has Pharmaxis Ltd Been A Good Investment?

With a three year total loss of 22%, Pharmaxis Ltd would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Pharmaxis Ltd with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Pharmaxis.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.