Shareholders May Not Be So Generous With XBiotech Inc.'s (NASDAQ:XBIT) CEO Compensation And Here's Why
Performance at XBiotech Inc. (NASDAQ:XBIT) has been reasonably good and CEO John Simard has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 22 June 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.
See our latest analysis for XBiotech
How Does Total Compensation For John Simard Compare With Other Companies In The Industry?
According to our data, XBiotech Inc. has a market capitalization of US$487m, and paid its CEO total annual compensation worth US$12m over the year to December 2020. That's a notable increase of 10% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$684k.
On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$2.3m. Accordingly, our analysis reveals that XBiotech Inc. pays John Simard north of the industry median. Moreover, John Simard also holds US$69m worth of XBiotech stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$684k | US$591k | 6% |
Other | US$11m | US$10m | 94% |
Total Compensation | US$12m | US$11m | 100% |
Speaking on an industry level, nearly 20% of total compensation represents salary, while the remainder of 80% is other remuneration. XBiotech pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at XBiotech Inc.'s Growth Numbers
XBiotech Inc.'s earnings per share (EPS) grew 72% per year over the last three years. It achieved revenue growth of 185% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has XBiotech Inc. Been A Good Investment?
We think that the total shareholder return of 262%, over three years, would leave most XBiotech Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
To Conclude...
The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.
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 1 warning sign for XBiotech that investors should look into moving forward.
Switching gears from XBiotech, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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