What Does Eagle Pharmaceuticals’ (NASDAQ:EGRX) CEO Pay Reveal?

This article will reflect on the compensation paid to Scott Tarriff who has served as CEO of Eagle Pharmaceuticals, Inc. (NASDAQ:EGRX) since 2007. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Eagle Pharmaceuticals

How Does Total Compensation For Scott Tarriff Compare With Other Companies In The Industry?

Our data indicates that Eagle Pharmaceuticals, Inc. has a market capitalization of US$635m, and total annual CEO compensation was reported as US$7.9m for the year to December 2019. Notably, that’s a decrease of 30% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$769k.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$3.3m. Accordingly, our analysis reveals that Eagle Pharmaceuticals, Inc. pays Scott Tarriff north of the industry median. What’s more, Scott Tarriff holds US$64m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary US$769k US$769k 10%
Other US$7.1m US$11m 90%
Total CompensationUS$7.9m US$11m100%

Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. It’s interesting to note that Eagle Pharmaceuticals allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NasdaqGM:EGRX CEO Compensation August 2nd 2020

A Look at Eagle Pharmaceuticals, Inc.’s Growth Numbers

Over the last three years, Eagle Pharmaceuticals, Inc. has shrunk its earnings per share by 70% per year. In the last year, its revenue is down 11%.

Few shareholders would be pleased to read that earnings have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. 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 Eagle Pharmaceuticals, Inc. Been A Good Investment?

Given the total shareholder loss of 2.9% over three years, many shareholders in Eagle 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.

To Conclude…

As we noted earlier, Eagle Pharmaceuticals pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn’t look good against shareholder returns, which have been negative for the past three years. To make matters worse, earnings growth has also been negative during this period. Overall, with such poor performance, shareholder’s would probably have questions if the company decided to give the CEO a raise.

CEO compensation can have a massive impact on performance, but it’s just one element. That’s why we did some digging and identified 3 warning signs for Eagle Pharmaceuticals that investors should think about before committing capital to this stock.

Switching gears from Eagle Pharmaceuticals, if you’re hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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