Stock Analysis

Shareholders Will Probably Hold Off On Increasing Cerus Corporation's (NASDAQ:CERS) CEO Compensation For The Time Being

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In the past three years, shareholders of Cerus Corporation (NASDAQ:CERS) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 02 June 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

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Comparing Cerus Corporation's CEO Compensation With the industry

Our data indicates that Cerus Corporation has a market capitalization of US$1.0b, and total annual CEO compensation was reported as US$4.5m for the year to December 2020. That's a notable increase of 38% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$670k.

On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$3.1m. This suggests that Obi Greenman is paid more than the median for the industry. Furthermore, Obi Greenman directly owns US$8.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$670k US$645k 15%
Other US$3.9m US$2.6m 85%
Total CompensationUS$4.5m US$3.3m100%

Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. Cerus sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NasdaqGM:CERS CEO Compensation May 27th 2021

A Look at Cerus Corporation's Growth Numbers

Over the past three years, Cerus Corporation has seen its earnings per share (EPS) grow by 5.7% per year. Its revenue is up 28% over the last year.

It's hard to interpret the strong revenue growth as anything other than a positive. And in that context, the modest EPS improvement certainly isn't shabby. We'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Cerus Corporation Been A Good Investment?

With a three year total loss of 11% for the shareholders, Cerus Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 3 warning signs for Cerus that investors should be aware of in a dynamic business environment.

Switching gears from Cerus, 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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