Should You Worry About Realm Therapeutics Plc’s (LON:RLM) CEO Pay Cheque?

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Alex Martin became the CEO of Realm Therapeutics Plc (LON:RLM) in 2015. 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. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Realm Therapeutics

How Does Alex Martin’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Realm Therapeutics Plc has a market cap of UK£8.3m, and is paying total annual CEO compensation of US$862k. (This figure is for the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$370k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO compensation was US$316k.

As you can see, Alex Martin is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Realm Therapeutics Plc is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Realm Therapeutics, below.

AIM:RLM CEO Compensation February 13th 19
AIM:RLM CEO Compensation February 13th 19

Is Realm Therapeutics Plc Growing?

On average over the last three years, Realm Therapeutics Plc has shrunk earnings per share by 19% each year (measured with a line of best fit). In the last year, its revenue is down -55%.

Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. We don’t have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Realm Therapeutics Plc Been A Good Investment?

Since shareholders would have lost about 71% over three years, some Realm Therapeutics Plc shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared total CEO remuneration at Realm Therapeutics Plc with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Realm Therapeutics.

Important note: Realm Therapeutics may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.