How Should Investors Feel About Eagle Pharmaceuticals, Inc.’s (NASDAQ:EGRX) CEO Pay?

In 2007 Scott Tarriff was appointed CEO of Eagle Pharmaceuticals, Inc. (NASDAQ:EGRX). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Eagle Pharmaceuticals

How Does Scott Tarriff’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Eagle Pharmaceuticals, Inc. has a market cap of US$773m, and is paying total annual CEO compensation of US$11m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$769k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.7m.

It would therefore appear that Eagle Pharmaceuticals, Inc. pays Scott Tarriff more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Eagle Pharmaceuticals has changed from year to year.

NasdaqGM:EGRX CEO Compensation, July 29th 2019
NasdaqGM:EGRX CEO Compensation, July 29th 2019

Is Eagle Pharmaceuticals, Inc. Growing?

Over the last three years Eagle Pharmaceuticals, Inc. has grown its earnings per share (EPS) by an average of 7.9% per year (using a line of best fit). In the last year, its revenue is up 4.8%.

I would argue that the improvement in revenue isn’t particularly impressive, but it is good to see modest EPS growth. It’s clear the performance has been quite decent, but it it falls short of outstanding,based on this information.

Has Eagle Pharmaceuticals, Inc. Been A Good Investment?

With a total shareholder return of 19% over three years, Eagle Pharmaceuticals, Inc. shareholders would, in general, be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

We examined the amount Eagle Pharmaceuticals, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

We generally prefer to see stronger EPS growth, and we’re not particularly impressed with the total shareholder return, over the last three years. So it’s certainly hard to argue that the CEO is modestly paid, although we don’t see the remuneration as an issue. Shareholders may want to check for free if Eagle Pharmaceuticals insiders are buying or selling shares.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.