Shareholders May Find It Hard To Justify Increasing Beam Therapeutics Inc.'s (NASDAQ:BEAM) CEO Compensation For Now

Key Insights

• Beam Therapeutics to hold its Annual General Meeting on 4th of June
• CEO John Evans' total compensation includes salary of US$715.8k
• The overall pay is comparable to the industry average
• Beam Therapeutics' EPS grew by 9.3% over the past three years while total shareholder loss over the past three years was 50%

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Shareholders of Beam Therapeutics Inc. (NASDAQ:BEAM) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 4th of June. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Beam Therapeutics

How Does Total Compensation For John Evans Compare With Other Companies In The Industry?

According to our data, Beam Therapeutics Inc. has a market capitalization of US$1.7b, and paid its CEO total annual compensation worth US$6.4m over the year to December 2024. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$716k.

In comparison with other companies in the American Biotechs industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$7.7m. From this we gather that John Evans is paid around the median for CEOs in the industry. What's more, John Evans holds US$15m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. Beam Therapeutics pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Beam Therapeutics Inc.'s Growth

Beam Therapeutics Inc. has seen its earnings per share (EPS) increase by 9.3% a year over the past three years. It saw its revenue drop 82% over the last year.

We would prefer it if there was revenue growth, but the modest EPS growth gives us some relief. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Beam Therapeutics Inc. Been A Good Investment?

Few Beam Therapeutics Inc. shareholders would feel satisfied with the return of -50% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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 Beam Therapeutics that investors should be aware of in a dynamic business environment.

Important note: Beam Therapeutics is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.