Why Applied Genetic Technologies' (NASDAQ:AGTC) CEO Pay Matters
This article will reflect on the compensation paid to Sue Washer who has served as CEO of Applied Genetic Technologies Corporation (NASDAQ:AGTC) since 2002. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Applied Genetic Technologies.
Check out our latest analysis for Applied Genetic Technologies
Comparing Applied Genetic Technologies Corporation's CEO Compensation With the industry
At the time of writing, our data shows that Applied Genetic Technologies Corporation has a market capitalization of US$108m, and reported total annual CEO compensation of US$988k for the year to June 2020. We note that's a small decrease of 6.1% on last year. In particular, the salary of US$529.6k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$942k. From this we gather that Sue Washer is paid around the median for CEOs in the industry. What's more, Sue Washer holds US$119k worth of shares in the company in their own name.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$530k | US$514k | 54% |
Other | US$459k | US$538k | 46% |
Total Compensation | US$988k | US$1.1m | 100% |
On an industry level, around 24% of total compensation represents salary and 76% is other remuneration. According to our research, Applied Genetic Technologies has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Applied Genetic Technologies Corporation's Growth Numbers
Applied Genetic Technologies Corporation has reduced its earnings per share by 47% a year over the last three years. It saw its revenue drop 91% over the last year.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Applied Genetic Technologies Corporation Been A Good Investment?
Applied Genetic Technologies Corporation has served shareholders reasonably well, with a total return of 15% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
To Conclude...
As previously discussed, Sue is compensated close to the median for companies of its size, and which belong to the same industry. Applied Genetic Technologies has had a poor showing when it comes to EPS growth, and it's tough to say that shareholder returns have done much to excite us. These figures do not go well against CEO compensation, which is more or less equal to the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 4 warning signs for Applied Genetic Technologies that investors should think about before committing capital to this stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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