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Why Mersana Therapeutics' (NASDAQ:MRSN) CEO Pay Matters

Simply Wall St
·3 mins read

This article will reflect on the compensation paid to Anna Protopapas who has served as CEO of Mersana Therapeutics, Inc. (NASDAQ:MRSN) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Mersana Therapeutics

Comparing Mersana Therapeutics, Inc.'s CEO Compensation With the industry

According to our data, Mersana Therapeutics, Inc. has a market capitalization of US$1.5b, and paid its CEO total annual compensation worth US$1.7m over the year to December 2019. Notably, that's a decrease of 33% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$533k.

For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$3.8m. That is to say, Anna Protopapas is paid under the industry median. Furthermore, Anna Protopapas directly owns US$4.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$533k

US$515k

31%

Other

US$1.2m

US$2.1m

69%

Total Compensation

US$1.7m

US$2.6m

100%

On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. Mersana Therapeutics is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

Mersana Therapeutics, Inc.'s Growth

Over the past three years, Mersana Therapeutics, Inc. has seen its earnings per share (EPS) grow by 86% per year. It saw its revenue drop 96% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 Mersana Therapeutics, Inc. Been A Good Investment?

Mersana Therapeutics, Inc. has served shareholders reasonably well, with a total return of 24% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As we noted earlier, Mersana Therapeutics pays its CEO lower than the norm for similar-sized companies belonging to the same industry. At the same time, EPS growth has been exceptional over the past three years. Unfortunately, although shareholder returns are growing, they haven't impressed us as much in comparison, over the same period. We would wish for better returns (whether dividends or capital gains) but we do admire the solidEPS growth on show here. As a result of these considerations, CEO compensation seems quite appropriate.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 5 warning signs for Mersana Therapeutics you should be aware of, and 1 of them makes us a bit uncomfortable.

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.

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