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Why Exelixis' (NASDAQ:EXEL) CEO Pay Matters

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Simply Wall St
·3 min read
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Michael Morrissey became the CEO of Exelixis, Inc. (NASDAQ:EXEL) in 2010, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Exelixis pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Exelixis

How Does Total Compensation For Michael Morrissey Compare With Other Companies In The Industry?

According to our data, Exelixis, Inc. has a market capitalization of US$6.7b, and paid its CEO total annual compensation worth US$2.1m over the year to January 2020. Notably, that's a decrease of 58% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.

On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$6.5m. This suggests that Michael Morrissey is paid below the industry median. Moreover, Michael Morrissey also holds US$23m worth of Exelixis stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2020

2018

Proportion (2020)

Salary

US$1.0m

US$945k

47%

Other

US$1.1m

US$4.1m

53%

Total Compensation

US$2.1m

US$5.1m

100%

Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. Exelixis is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Exelixis, Inc.'s Growth Numbers

Over the past three years, Exelixis, Inc. has seen its earnings per share (EPS) grow by 65% per year. It achieved revenue growth of 9.7% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Exelixis, Inc. Been A Good Investment?

With a three year total loss of 21% for the shareholders, Exelixis, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, Exelixis, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However we must not forget that the EPS growth has been very strong over three years. It's tough to criticize CEO compensation when the per-share EPS movement is positive. But shareholders will likely want to hold off on any raise for Michael until investor returns are positive.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Exelixis that investors should look into moving forward.

Switching gears from Exelixis, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.