Our View On IRLAB Therapeutics' (STO:IRLAB A) CEO Pay

Nicholas Waters has been the CEO of IRLAB Therapeutics AB (publ) (STO:IRLAB A) since 2016, 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.

Check out our latest analysis for IRLAB Therapeutics

How Does Total Compensation For Nicholas Waters Compare With Other Companies In The Industry?

According to our data, IRLAB Therapeutics AB (publ) has a market capitalization of kr2.1b, and paid its CEO total annual compensation worth kr2.2m over the year to December 2019. That's just a smallish increase of 6.6% on last year. We note that the salary portion, which stands at kr1.60m constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between kr828m and kr3.3b, we discovered that the median CEO total compensation of that group was kr3.3m. In other words, IRLAB Therapeutics pays its CEO lower than the industry median. Furthermore, Nicholas Waters directly owns kr31m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 53% of total compensation represents salary, while the remainder of 47% is other remuneration. According to our research, IRLAB Therapeutics has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

IRLAB Therapeutics AB (publ)'s Growth

Over the last three years, IRLAB Therapeutics AB (publ) has shrunk its earnings per share by 9.1% per year. It saw its revenue drop 57% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 IRLAB Therapeutics AB (publ) Been A Good Investment?

We think that the total shareholder return of 51%, over three years, would leave most IRLAB Therapeutics AB (publ) shareholders smiling. 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...

As we noted earlier, IRLAB Therapeutics pays its CEO lower than the norm for similar-sized companies belonging to the same industry. And while EPS growth is in the red, shareholder returns have been great over the last three years, so that's certainly a bright spot! We would like to see EPS growth, but in our view CEO compensation is modest.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for IRLAB Therapeutics (of which 2 are potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from IRLAB Therapeutics, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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