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Is Xencor, Inc.’s (NASDAQ:XNCR) CEO Paid Enough Relative To Peers?

Simply Wall St

In 2005 Bassil Dahiyat was appointed CEO of Xencor, Inc. (NASDAQ:XNCR). First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Xencor

How Does Bassil Dahiyat’s Compensation Compare With Similar Sized Companies?

Our data indicates that Xencor, Inc. is worth US$1.7b, and total annual CEO compensation is US$5.0m. (This is based on the year to December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$525k. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO compensation was US$3.5m.

It would therefore appear that Xencor, Inc. pays Bassil Dahiyat 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Xencor has changed over time.

NasdaqGM:XNCR CEO Compensation, March 1st 2019
NasdaqGM:XNCR CEO Compensation, March 1st 2019

Is Xencor, Inc. Growing?

Over the last three years Xencor, Inc. has shrunk its earnings per share by an average of 71% per year (measured with a line of best fit). Its revenue is up 14% over last year.

Unfortunately, earnings per share have trended lower over the last three years. And while it’s good to see some good revenue growth recently, the growth isn’t really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Xencor, Inc. Been A Good Investment?

Boasting a total shareholder return of 163% over three years, Xencor, Inc. has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

We examined the amount Xencor, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

On the other hand, returns have been good, so the company is doing something right. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Xencor (free visualization of insider trades).

Important note: Xencor 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.