Key Things To Understand About Pharmaxis' (ASX:PXS) CEO Pay Cheque

Gary Phillips became the CEO of Pharmaxis Ltd (ASX:PXS) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Pharmaxis pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Pharmaxis

How Does Total Compensation For Gary Phillips Compare With Other Companies In The Industry?

Our data indicates that Pharmaxis Ltd has a market capitalization of AU$32m, and total annual CEO compensation was reported as AU$559k for the year to June 2020. Notably, that's a decrease of 8.9% over the year before. We note that the salary portion, which stands at AU$440.4k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under AU$259m, the reported median total CEO compensation was AU$427k. Accordingly, our analysis reveals that Pharmaxis Ltd pays Gary Phillips north of the industry median. Furthermore, Gary Phillips directly owns AU$191k worth of shares in the company.

Talking in terms of the industry, salary represented approximately 66% of total compensation out of all the companies we analyzed, while other remuneration made up 34% of the pie. It's interesting to note that Pharmaxis pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Pharmaxis Ltd's Growth Numbers

Over the last three years, Pharmaxis Ltd has shrunk its earnings per share by 33% per year. In the last year, its revenue is up 67%.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Pharmaxis Ltd Been A Good Investment?

Since shareholders would have lost about 74% over three years, some Pharmaxis Ltd investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Pharmaxis pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Meanwhile, the company has been unable to show any EPS growth, and shareholder returns are also in the red. On the bright side, at lease revenue growth seems to be marching northward. Suffice it to say, we don't think the CEO is underpaid!

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 4 warning signs for Pharmaxis (1 shouldn't be ignored!) that you should be aware of before investing here.

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.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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