In the past three years, the share price of Biogen Inc. (NASDAQ:BIIB) has struggled to generate growth for its shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 02 June 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Comparing Biogen Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Biogen Inc. has a market capitalization of US$41b, and reported total annual CEO compensation of US$19m for the year to December 2020. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.5m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$18m. This suggests that Biogen remunerates its CEO largely in line with the industry average. What's more, Michel Vounatsos 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, roughly 19% of total compensation represents salary and 81% is other remuneration. Biogen 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.
A Look at Biogen Inc.'s Growth Numbers
Over the past three years, Biogen Inc. has seen its earnings per share (EPS) grow by 11% per year. It saw its revenue drop 13% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Biogen Inc. Been A Good Investment?
Since shareholders would have lost about 7.1% over three years, some Biogen Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.
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. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
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. That's why we did some digging and identified 2 warning signs for Biogen that investors should think about before committing capital to this stock.
Important note: Biogen 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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