Should You Worry About Pharming Group N.V.'s (AMS:PHARM) CEO Pay Cheque?

Simon de Vries has been the CEO of Pharming Group N.V. (AMS:PHARM) since 2008. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Pharming Group

How Does Simon de Vries's Compensation Compare With Similar Sized Companies?

According to our data, Pharming Group N.V. has a market capitalization of €668m, and paid its CEO total annual compensation worth €1.4m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €490k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of €368m to €1.5b. The median total CEO compensation was €1.2m.

Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Pharming Group. On an industry level, roughly 57% of total compensation represents salary and 43% is other remuneration. Pharming Group sets aside a smaller share of compensation for salary, in comparison to the overall industry.

So Simon de Vries is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance. You can see a visual representation of the CEO compensation at Pharming Group, below.

Is Pharming Group N.V. Growing?

On average over the last three years, Pharming Group N.V. has seen earnings per share (EPS) move in a favourable direction by 81% each year (using a line of best fit). Its revenue is up 25% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. 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 Pharming Group N.V. Been A Good Investment?

I think that the total shareholder return of 259%, over three years, would leave most Pharming Group N.V. 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.

In Summary...

Remuneration for Simon de Vries is close enough to the median pay for a CEO of a similar sized company .

The company is growing earnings per share and total shareholder returns have been pleasing. So one could argue the CEO compensation is quite modest, if you consider company performance! Looking into other areas, we've picked out 3 warning signs for Pharming Group that investors should think about before committing capital to this stock.

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.

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.

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