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In 1999 Justin Gover was appointed CEO of GW Pharmaceuticals plc (NASDAQ:GWPH). 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. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for GW Pharmaceuticals
How Does Justin Gover’s Compensation Compare With Similar Sized Companies?
According to our data, GW Pharmaceuticals plc has a market capitalization of US$5.3b, and pays its CEO total annual compensation worth US$566k. (This is based on the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$140k. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$6.9m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at GW Pharmaceuticals has changed from year to year.
Is GW Pharmaceuticals plc Growing?
Over the last three years GW Pharmaceuticals plc has shrunk its earnings per share by an average of 36% per year (measured with a line of best fit). Its revenue is up 253% over last year.
As investors, we are a bit wary of companies that have lower earnings per share, over three years. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching.
Has GW Pharmaceuticals plc Been A Good Investment?
Boasting a total shareholder return of 84% over three years, GW Pharmaceuticals plc 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…
GW Pharmaceuticals plc is currently paying its CEO below what is normal for companies of its size.
Justin Gover receives relatively low remuneration compared to similar sized companies. And the returns to shareholders were great, over the last few years. Although we could see higher growth, we’d argue the remuneration is modest, based on these observations. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at GW Pharmaceuticals.
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.
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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.