In 2007 John Melo was appointed CEO of Amyris, Inc. (NASDAQ:AMRS). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does John Melo's Compensation Compare With Similar Sized Companies?
Our data indicates that Amyris, Inc. is worth US$391m, and total annual CEO compensation was reported as US$9.6m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$600k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO total compensation of that group was US$2.1m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Amyris stands. On an industry level, roughly 18% of total compensation represents salary and 82% is other remuneration. Non-salary compensation represents a greater slice of the remuneration pie for Amyris, in sharp contrast to the overall sector.
It would therefore appear that Amyris, Inc. pays John Melo more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. The graphic below shows how CEO compensation at Amyris has changed from year to year.
Is Amyris, Inc. Growing?
On average over the last three years, Amyris, Inc. has seen earnings per share (EPS) move in a favourable direction by 30% each year (using a line of best fit). In the last year, its revenue is up 140%.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.
Has Amyris, Inc. Been A Good Investment?
Given the total loss of 71% over three years, many shareholders in Amyris, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We examined the amount Amyris, Inc. 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.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. Considering positive per-share earnings movement, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. On another note, Amyris has 3 warning signs (and 2 which are a bit concerning) we think you should know about.
If you want to buy a stock that is better than Amyris, this free list of high return, low debt companies is a great place to look.
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