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In the past three years, the share price of Iterum Therapeutics plc (NASDAQ:ITRM) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 23 June 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
Comparing Iterum Therapeutics plc's CEO Compensation With the industry
At the time of writing, our data shows that Iterum Therapeutics plc has a market capitalization of US$356m, and reported total annual CEO compensation of US$1.8m for the year to December 2020. Notably, that's an increase of 26% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$561k.
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$1.9m. From this we gather that Corey Fishman is paid around the median for CEOs in the industry. Furthermore, Corey Fishman directly owns US$641k worth of shares in the company.
On an industry level, around 28% of total compensation represents salary and 72% is other remuneration. Iterum Therapeutics is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Iterum Therapeutics plc's Growth
Iterum Therapeutics plc's earnings per share (EPS) grew 125% per year over the last three years. In the last year, the company lost virtually all of its revenue.
This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Iterum Therapeutics plc Been A Good Investment?
With a total shareholder return of -83% over three years, Iterum Therapeutics plc shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 2 which shouldn't be ignored) in Iterum Therapeutics we think you should know about.
Important note: Iterum Therapeutics 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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