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In 2012 Peter Maag was appointed CEO of CareDx, Inc (NASDAQ:CDNA). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Peter Maag’s Compensation Compare With Similar Sized Companies?
Our data indicates that CareDx, Inc is worth US$1.2b, and total annual CEO compensation is US$1.4m. (This figure is for the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at US$450k. We looked at a group of companies with market capitalizations from US$400m to US$1.6b, and the median CEO total compensation was US$2.3m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
The graphic below shows how CEO compensation at CareDx has changed from year to year.
Is CareDx, Inc Growing?
Over the last three years CareDx, Inc has shrunk its earnings per share by an average of 5.1% per year (measured with a line of best fit). Its revenue is up 58% over last year.
The reduction in earnings per share, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. In conclusion we can’t form a strong opinion about business performance yet; but it’s one worth watching. You might want to check this free visual report on analyst forecasts for future earnings.
Has CareDx, Inc Been A Good Investment?
I think that the total shareholder return of 551%, over three years, would leave most CareDx, Inc shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
It looks like CareDx, Inc pays its CEO less than similar sized companies.
Peter Maag receives relatively low remuneration compared to similar sized companies. And the returns to shareholders were great, over the last few years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. Shareholders may want to check for free if CareDx insiders are buying or selling shares.
If you want to buy a stock that is better than CareDx, this free list of high return, low debt companies is a great place to look.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.