Does Gilead Sciences Inc’s (NASDAQ:GILD) CEO Pay Reflect Performance?

John Milligan became the CEO of Gilead Sciences Inc (NASDAQ:GILD) in 2016. First, this article will compare CEO compensation with compensation at other large companies. Then we’ll look at a snap shot of the business growth. 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.

View our latest analysis for Gilead Sciences

How Does John Milligan’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Gilead Sciences Inc has a market cap of US$86b, and is paying total annual CEO compensation of US$15m. (This figure is for the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.5m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO compensation was US$11m.

It would therefore appear that Gilead Sciences Inc pays John Milligan more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at Gilead Sciences has changed from year to year.

NasdaqGS:GILD CEO Compensation November 27th 18
NasdaqGS:GILD CEO Compensation November 27th 18

Is Gilead Sciences Inc Growing?

On average over the last three years, Gilead Sciences Inc has shrunk earnings per share by 49% each year. Its revenue is down -19% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

You might want to check this free visual report on analyst forecasts for future earnings.

Has Gilead Sciences Inc Been A Good Investment?

With a three year total loss of 32%, Gilead Sciences Inc would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared total CEO remuneration at Gilead Sciences Inc with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Just as bad, share price gains for investors have failed to materialize, over the same period. This analysis suggests to us that the CEO is paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Gilead Sciences.

Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.