What Can We Learn About Pharming Group's (AMS:PHARM) CEO Compensation?

Simon de Vries has been the CEO of Pharming Group N.V. (AMS:PHARM) since 2008, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Pharming Group

Comparing Pharming Group N.V.'s CEO Compensation With the industry

Our data indicates that Pharming Group N.V. has a market capitalization of €616m, and total annual CEO compensation was reported as €1.4m for the year to December 2019. That's a modest increase of 3.8% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at €507k.

For comparison, other companies in the same industry with market capitalizations ranging between €341m and €1.4b had a median total CEO compensation of €638k. Hence, we can conclude that Simon de Vries is remunerated higher than the industry median. Furthermore, Simon de Vries directly owns €6.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 64% of total compensation represents salary, while the remainder of 36% is other remuneration. Pharming Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Pharming Group N.V.'s Growth

Pharming Group N.V. has seen its earnings per share (EPS) increase by 103% a year over the past three years. In the last year, its revenue is up 17%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

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

With a total shareholder return of 23% over three years, Pharming Group N.V. shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

As we noted earlier, Pharming Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, we must not forget that the EPS growth has been very strong over three years. We also note that, over the same time frame, shareholder returns haven't been bad. While it may be worth researching further, we don't see a problem with the high CEO pay, given the good EPS growth.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 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.

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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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