Michael Morrissey has been the CEO of Exelixis, Inc. (NASDAQ:EXEL) since 2010. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Michael Morrissey’s Compensation Compare With Similar Sized Companies?
According to our data, Exelixis, Inc. has a market capitalization of US$7.1b, and pays its CEO total annual compensation worth US$9.4m. (This is based on the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at US$892k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.2m.
Thus we can conclude that Michael Morrissey receives more in total compensation than the median of a group of companies in the same market, and of similar size to Exelixis, Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Exelixis, below.
Is Exelixis, Inc. Growing?
Exelixis, Inc. has increased its earnings per share (EPS) by an average of 122% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 89%.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.
Has Exelixis, Inc. Been A Good Investment?
I think that the total shareholder return of 458%, over three years, would leave most Exelixis, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We compared total CEO remuneration at Exelixis, Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. So you may want to check if insiders are buying Exelixis shares with their own money (free access).
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.
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