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Is TherapeuticsMD, Inc. (NASDAQ:TXMD) Overpaying Its CEO?

Simply Wall St

Rob Finizio has been the CEO of TherapeuticsMD, Inc. (NASDAQ:TXMD) since 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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 process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for TherapeuticsMD

How Does Rob Finizio's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that TherapeuticsMD, Inc. has a market cap of US$1.1b, and is paying total annual CEO compensation of US$3.0m. (This number is for the twelve months until December 2017). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$600k. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$2.2m.

It would therefore appear that TherapeuticsMD, Inc. pays Rob Finizio 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 TherapeuticsMD, below.

NasdaqGS:TXMD CEO Compensation, April 12th 2019

Is TherapeuticsMD, Inc. Growing?

Over the last three years TherapeuticsMD, Inc. has shrunk its earnings per share by an average of 2.5% per year (measured with a line of best fit). It saw its revenue drop -4.0% over the last year.

Unfortunately there is a complete lack of earnings per share improvement, over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has TherapeuticsMD, Inc. Been A Good Investment?

Since shareholders would have lost about 42% over three years, some TherapeuticsMD, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at TherapeuticsMD, Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling TherapeuticsMD shares (free trial).

Important note: TherapeuticsMD may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.