John Thero became the CEO of Amarin Corporation plc (NASDAQ:AMRN) in 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does John Thero’s Compensation Compare With Similar Sized Companies?
Our data indicates that Amarin Corporation plc is worth US$2.8b, and total annual CEO compensation was reported as US$8.9m for the year to December 2019. We note that’s an increase of 112% above last year. While we always look at total compensation first, we note that the salary component is less, at US$697k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$5.7m.
Now let’s take a look at the pay mix on an industry and company level to gain a better understanding of where Amarin stands. On a sector level, around 23% of total compensation represents salary and 77% is other remuneration. It’s interesting to note that Amarin allocates a smaller portion of compensation to salary in comparison to the broader industry.
Thus we can conclude that John Thero receives more in total compensation than the median of a group of companies in the same market, and of similar size to Amarin Corporation plc. However, this doesn’t necessarily mean the pay 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 Amarin has changed over time.
Is Amarin Corporation plc Growing?
Over the last three years Amarin Corporation plc has seen earnings per share (EPS) move in a positive direction by an average of 23% per year (using a line of best fit). Its revenue is up 97% over last year.
This demonstrates that the company has been improving recently. A good result. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Amarin Corporation plc Been A Good Investment?
I think that the total shareholder return of 147%, over three years, would leave most Amarin Corporation plc shareholders smiling. 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.
We compared the total CEO remuneration paid by Amarin Corporation plc, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. Shifting gears from CEO pay for a second, we’ve picked out 2 warning signs for Amarin that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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. Thank you for reading.