Why We Think Geron Corporation's (NASDAQ:GERN) CEO Compensation Is Not Excessive At All

Key Insights

• Geron will host its Annual General Meeting on 9th of May
• Total pay for CEO Chip Scarlett includes US$787.0k salary
• The total compensation is 31% less than the average for the industry
• Geron's EPS declined by 2.8% over the past three years while total shareholder return over the past three years was 197%

Performance at Geron Corporation (NASDAQ:GERN) has been rather uninspiring recently and shareholders may be wondering how CEO Chip Scarlett plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 9th of May. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

Check out our latest analysis for Geron

Comparing Geron Corporation's CEO Compensation With The Industry

Our data indicates that Geron Corporation has a market capitalization of US$2.3b, and total annual CEO compensation was reported as US$4.9m for the year to December 2023. We note that's an increase of 64% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$787k.

For comparison, other companies in the American Biotechs industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$7.1m. This suggests that Chip Scarlett is paid below the industry median. Moreover, Chip Scarlett also holds US$494k worth of Geron stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	US$787k	US$761k	16%
Other	US$4.1m	US$2.2m	84%
Total Compensation	US$4.9m	US$3.0m	100%

On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. It's interesting to note that Geron allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Geron Corporation's Growth Numbers

Geron Corporation has reduced its earnings per share by 2.8% a year over the last three years. Its revenue is up 5.3% over the last year.

The lack of EPS growth is certainly uninspiring. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Geron Corporation Been A Good Investment?

We think that the total shareholder return of 197%, over three years, would leave most Geron Corporation 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.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Geron you should be aware of, and 2 of them are significant.

Important note: Geron 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.