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Nektar Therapeutics (NASDAQ:NKTR) has not performed well recently and CEO Howard Robin will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 10 June 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.
Comparing Nektar Therapeutics' CEO Compensation With the industry
Our data indicates that Nektar Therapeutics has a market capitalization of US$3.3b, and total annual CEO compensation was reported as US$11m for the year to December 2020. Notably, that's an increase of 13% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$6.9m. Hence, we can conclude that Howard Robin is remunerated higher than the industry median. Moreover, Howard Robin also holds US$4.8m worth of Nektar Therapeutics stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 28% of total compensation out of all the companies we analyzed, while other remuneration made up 72% of the pie. It's interesting to note that Nektar Therapeutics allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Nektar Therapeutics' Growth
Over the last three years, Nektar Therapeutics has shrunk its earnings per share by 81% per year. In the last year, its revenue is down 8.0%.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Nektar Therapeutics Been A Good Investment?
The return of -67% over three years would not have pleased Nektar Therapeutics shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Nektar Therapeutics that investors should think about before committing capital to this stock.
Switching gears from Nektar Therapeutics, 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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