We Think Some Shareholders May Hesitate To Increase Gilead Sciences, Inc.'s (NASDAQ:GILD) CEO Compensation

Key Insights

• Gilead Sciences' Annual General Meeting to take place on 8th of May
• Total pay for CEO Dan O'Day includes US$1.74m salary
• The total compensation is 40% higher than the average for the industry
• Over the past three years, Gilead Sciences' EPS grew by 18% and over the past three years, the total shareholder return was 11%

CEO Dan O'Day has done a decent job of delivering relatively good performance at Gilead Sciences, Inc. (NASDAQ:GILD) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 8th of May. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for Gilead Sciences

How Does Total Compensation For Dan O'Day Compare With Other Companies In The Industry?

According to our data, Gilead Sciences, Inc. has a market capitalization of US$81b, and paid its CEO total annual compensation worth US$23m over the year to December 2023. That's a modest increase of 4.6% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.7m.

For comparison, other companies in the American Biotechs industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$16m. Accordingly, our analysis reveals that Gilead Sciences, Inc. pays Dan O'Day north of the industry median. What's more, Dan O'Day holds US$32m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.7m	US$1.7m	8%
Other	US$21m	US$20m	92%
Total Compensation	US$23m	US$22m	100%

On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. It's interesting to note that Gilead Sciences 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.

Gilead Sciences, Inc.'s Growth

Gilead Sciences, Inc.'s earnings per share (EPS) grew 18% per year over the last three years. In the last year, its revenue is up 1.5%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Gilead Sciences, Inc. Been A Good Investment?

Gilead Sciences, Inc. has served shareholders reasonably well, with a total return of 11% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 4 warning signs for Gilead Sciences that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.