How Should Investors React To Clinuvel Pharmaceuticals Limited’s (ASX:CUV) CEO Pay?

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In 2005 Philippe Wolgen was appointed CEO of Clinuvel Pharmaceuticals Limited (ASX:CUV). 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. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Clinuvel Pharmaceuticals

How Does Philippe Wolgen’s Compensation Compare With Similar Sized Companies?

Our data indicates that Clinuvel Pharmaceuticals Limited is worth AU$1.2b, and total annual CEO compensation is AU$2.3m. (This figure is for the year to 2018). While we always look at total compensation first, we note that the salary component is less, at AU$818k. We examined companies with market caps from AU$560m to AU$2.2b, and discovered that the median CEO compensation of that group was AU$1.6m.

It would therefore appear that Clinuvel Pharmaceuticals Limited pays Philippe Wolgen 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 Clinuvel Pharmaceuticals has changed over time.

ASX:CUV CEO Compensation, February 21st 2019
ASX:CUV CEO Compensation, February 21st 2019

Is Clinuvel Pharmaceuticals Limited Growing?

Over the last three years Clinuvel Pharmaceuticals Limited has grown its earnings per share (EPS) by an average of 117% per year (using a line of best fit). It achieved revenue growth of 52% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. It could be important to check this free visual depiction of what analysts expect for the future.

Has Clinuvel Pharmaceuticals Limited Been A Good Investment?

Boasting a total shareholder return of 669% over three years, Clinuvel Pharmaceuticals Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

We compared total CEO remuneration at Clinuvel Pharmaceuticals Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. Shareholders may want to check for free if Clinuvel Pharmaceuticals insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.