We Think Some Shareholders May Hesitate To Increase ADMA Biologics, Inc.'s (NASDAQ:ADMA) CEO Compensation
In the past three years, the share price of ADMA Biologics, Inc. (NASDAQ:ADMA) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 27 May 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
View our latest analysis for ADMA Biologics
Comparing ADMA Biologics, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that ADMA Biologics, Inc. has a market capitalization of US$226m, and reported total annual CEO compensation of US$2.0m for the year to December 2020. That's a notable increase of 15% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$600k.
On examining similar-sized companies in the industry with market capitalizations between US$100m and US$400m, we discovered that the median CEO total compensation of that group was US$1.7m. This suggests that ADMA Biologics remunerates its CEO largely in line with the industry average. Moreover, Adam Grossman also holds US$1.7m worth of ADMA Biologics stock directly under their own name.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$600k | US$536k | 31% |
Other | US$1.4m | US$1.2m | 69% |
Total Compensation | US$2.0m | US$1.7m | 100% |
On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. According to our research, ADMA Biologics has allocated a higher percentage of pay to salary in comparison to the wider industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at ADMA Biologics, Inc.'s Growth Numbers
ADMA Biologics, Inc.'s earnings per share (EPS) grew 28% per year over the last three years. In the last year, its revenue is up 33%.
This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 ADMA Biologics, Inc. Been A Good Investment?
The return of -67% over three years would not have pleased ADMA Biologics, Inc. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.
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 3 warning signs for ADMA Biologics that investors should think about before committing capital to this stock.
Switching gears from ADMA Biologics, 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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