Stock Analysis

Collegium Pharmaceutical, Inc.'s (NASDAQ:COLL) CEO Compensation Is Looking A Bit Stretched At The Moment

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As many shareholders of Collegium Pharmaceutical, Inc. (NASDAQ:COLL) will be aware, they have not made a gain on their investment in the past three years. 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 20 May 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.

See our latest analysis for Collegium Pharmaceutical

Comparing Collegium Pharmaceutical, Inc.'s CEO Compensation With the industry

According to our data, Collegium Pharmaceutical, Inc. has a market capitalization of US$770m, and paid its CEO total annual compensation worth US$6.0m over the year to December 2020. Notably, that's an increase of 50% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$654k.

On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$2.0m. This suggests that Joe Ciaffoni is paid more than the median for the industry. What's more, Joe Ciaffoni holds US$1.5m worth of shares in the company in their own name.

Component20202019Proportion (2020)
Salary US$654k US$618k 11%
Other US$5.4m US$3.4m 89%
Total CompensationUS$6.0m US$4.0m100%

Speaking on an industry level, nearly 28% of total compensation represents salary, while the remainder of 72% is other remuneration. Collegium Pharmaceutical sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NasdaqGS:COLL CEO Compensation May 14th 2021

Collegium Pharmaceutical, Inc.'s Growth

Collegium Pharmaceutical, Inc. has seen its earnings per share (EPS) increase by 109% a year over the past three years. It achieved revenue growth of 7.5% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Collegium Pharmaceutical, Inc. Been A Good Investment?

With a three year total loss of 14% for the shareholders, Collegium Pharmaceutical, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which is concerning) in Collegium Pharmaceutical we think you should know about.

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