Is Pharming Group N.V. (AMS:PHARM) Overpaying Its CEO?

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In 2008 Sijmen de Vries was appointed CEO of Pharming Group N.V. (AMS:PHARM). 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. 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.

View our latest analysis for Pharming Group

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

At the time of writing our data says that Pharming Group N.V. has a market cap of €520m, and is paying total annual CEO compensation of €1.5m. (This figure is for the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at €475k. When we examined a selection of companies with market caps ranging from €177m to €710m, we found the median CEO compensation was €794k.

As you can see, Sijmen de Vries is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Pharming Group N.V. 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 Pharming Group, below.

Is Pharming Group N.V. Growing?

On average over the last three years, Pharming Group N.V. has shrunk earnings per share by 57% each year (measured with a line of best fit). In the last year, its revenue is up 105%.

As investors, we are a bit wary of companies that have lower earnings per share, over three years. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. It could be important to check this free visual depiction of what analysts expect for the future.

Has Pharming Group N.V. Been A Good Investment?

Most shareholders would probably be pleased with Pharming Group N.V. for providing a total return of 236% over three years. 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...

We examined the amount Pharming Group N.V. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Over the last three years returns to investors have been great, though we might have liked stronger business growth. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. So you may want to check if insiders are buying Pharming Group shares with their own money (free access).

If you want to buy a stock that is better than Pharming Group, this freelist of high return, low debt companies is a great place to look.

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. On rare occasion, data errors may occur. Thank you for reading.