Chip Scarlett became the CEO of Geron Corporation (NASDAQ:GERN) in 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. 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 Chip Scarlett’s Compensation Compare With Similar Sized Companies?
Our data indicates that Geron Corporation is worth US$272m, and total annual CEO compensation was reported as US$2.8m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$667k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO total compensation of that group was US$1.1m.
As you can see, Chip Scarlett is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Geron Corporation is paying too much. 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 a visual representation of the CEO compensation at Geron, below.
Is Geron Corporation Growing?
Over the last three years Geron Corporation has shrunk its earnings per share by an average of 4.1% per year (measured with a line of best fit). In the last year, its revenue is down 25%.
Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.
Has Geron Corporation Been A Good Investment?
Since shareholders would have lost about 31% over three years, some Geron Corporation shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by Geron Corporation, 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.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. Just as bad, share price gains for investors have failed to materialize, over the same period. In our opinion the CEO might be paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Geron.
If you want to buy a stock that is better than Geron, this free list of high return, low debt companies is a great place to look.
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