In 1996 Jack Zhang was appointed CEO of Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Jack Zhang’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Amphastar Pharmaceuticals, Inc. has a market cap of US$882m, and reported total annual CEO compensation of US$5.9m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.1m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.5m.
It would therefore appear that Amphastar Pharmaceuticals, Inc. pays Jack Zhang 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Amphastar Pharmaceuticals has changed from year to year.
Is Amphastar Pharmaceuticals, Inc. Growing?
Amphastar Pharmaceuticals, Inc. has increased its earnings per share (EPS) by an average of 49% a year, over the last three years (using a line of best fit). It achieved revenue growth of 24% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Shareholders might be interested in this free visualization of analyst forecasts.
Has Amphastar Pharmaceuticals, Inc. Been A Good Investment?
Amphastar Pharmaceuticals, Inc. has generated a total shareholder return of 14% over three years, so most shareholders would be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.
We compared total CEO remuneration at Amphastar Pharmaceuticals, Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. We also note that, over the same time frame, shareholder returns haven’t been bad. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management. Shareholders may want to check for free if Amphastar Pharmaceuticals insiders are buying or selling shares.
If you want to buy a stock that is better than Amphastar Pharmaceuticals, this free list of high return, low debt companies is a great place to look.
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