Is Epigenomics AG (FRA:ECX) Excessively Paying Its CEO?

July 25, 2019

In 2016 Greg Hamilton was appointed CEO of Epigenomics AG (FRA:ECX). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Epigenomics

How Does Greg Hamilton's Compensation Compare With Similar Sized Companies?

According to our data, Epigenomics AG has a market capitalization of €64m, and pays its CEO total annual compensation worth €962k. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at €349k. We took a group of companies with market capitalizations below €179m, and calculated the median CEO total compensation to be €226k.

It would therefore appear that Epigenomics AG pays Greg Hamilton 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. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

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

Is Epigenomics AG Growing?

Epigenomics AG has increased its earnings per share (EPS) by an average of 10% a year, over the last three years (using a line of best fit). It saw its revenue drop -18% over the last year.

This demonstrates that the company has been improving recently. A good result. While it would be good to see revenue growth, profits matter more in the end.

Has Epigenomics AG Been A Good Investment?

Given the total loss of 61% over three years, many shareholders in Epigenomics AG are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared the total CEO remuneration paid by Epigenomics AG, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Epigenomics (free visualization of insider trades).

If you want to buy a stock that is better than Epigenomics, this free list of high return, low debt companies is a great place to look.

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.

mitchell_lawler

A landmark settlement is meant to punish Meta (META). If the 1998 tobacco deal is any guide, it might protect it.

149

zoe_vi5fn1d

Any moat with an opt-out clause for your competitors is just a fence around your own garden.

connor_iwn1g1d

Worth looking at what previous legal action actually did to Meta rather than reaching for tobacco. The FTC's record five billion dollar privacy fine in 2019 was met with the stock rising, because it came in below fears and removed an open question. GDPR was designed to constrain large platforms and increased their share of the European ad market, because compliance cost fell hardest on small intermediaries. The FTC's antitrust case, the one that could genuinely have broken the company up, was decided in Meta's favour last November. The only thing that ever meaningfully hurt the business was Apple changing a tracking default, and Meta out-spent that too, while the ad-tech firms that could not afford to rebuild disappeared. The pattern is not that Meta survives regulation. It is that regulation keeps costing its smaller competitors more.