A. Kazimi has been the CEO of Cumberland Pharmaceuticals Inc. (NASDAQ:CPIX) since 1999, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Cumberland Pharmaceuticals.
How Does Total Compensation For A. Kazimi Compare With Other Companies In The Industry?
Our data indicates that Cumberland Pharmaceuticals Inc. has a market capitalization of US$50m, and total annual CEO compensation was reported as US$1.5m for the year to December 2019. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$567k.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$860k. Accordingly, our analysis reveals that Cumberland Pharmaceuticals Inc. pays A. Kazimi north of the industry median. Furthermore, A. Kazimi directly owns US$19m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 25% of total compensation represents salary, while the remainder of 75% is other remuneration. It's interesting to note that Cumberland Pharmaceuticals pays out a greater portion of remuneration through salary, compared to the industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Cumberland Pharmaceuticals Inc.'s Growth
Over the past three years, Cumberland Pharmaceuticals Inc. has seen its earnings per share (EPS) grow by 18% per year. It achieved revenue growth of 18% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 Cumberland Pharmaceuticals Inc. Been A Good Investment?
Given the total shareholder loss of 52% over three years, many shareholders in Cumberland Pharmaceuticals Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, Cumberland Pharmaceuticals Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has impressed with its EPS growth, but it's disappointing to see negative shareholder returns over the same period. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.
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 did our research and spotted 2 warning signs for Cumberland Pharmaceuticals that investors should look into moving forward.
Important note: Cumberland Pharmaceuticals 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. 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.
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