Why We Think Inovio Pharmaceuticals, Inc.'s (NASDAQ:INO) CEO Compensation Is Not Excessive At All

By
Simply Wall St
Published
May 07, 2021
NasdaqGS:INO

Performance at Inovio Pharmaceuticals, Inc. (NASDAQ:INO) has been reasonably good and CEO J. Kim has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 13 May 2021. Here is our take on why we think the CEO compensation looks appropriate.

Check out our latest analysis for Inovio Pharmaceuticals

How Does Total Compensation For J. Kim Compare With Other Companies In The Industry?

At the time of writing, our data shows that Inovio Pharmaceuticals, Inc. has a market capitalization of US$1.4b, and reported total annual CEO compensation of US$4.7m for the year to December 2020. That's a notable increase of 82% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$695k.

On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$4.6m. From this we gather that J. Kim is paid around the median for CEOs in the industry. What's more, J. Kim holds US$14m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$695k US$838k 15%
Other US$4.0m US$1.8m 85%
Total CompensationUS$4.7m US$2.6m100%

Talking in terms of the industry, salary represented approximately 21% of total compensation out of all the companies we analyzed, while other remuneration made up 79% of the pie. In Inovio Pharmaceuticals' case, non-salary compensation represents a greater slice of total remuneration, 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.

ceo-compensation
NasdaqGS:INO CEO Compensation May 7th 2021

A Look at Inovio Pharmaceuticals, Inc.'s Growth Numbers

Over the last three years, Inovio Pharmaceuticals, Inc. has shrunk its earnings per share by 9.8% per year. It achieved revenue growth of 81% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Inovio Pharmaceuticals, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Inovio Pharmaceuticals, Inc. for providing a total return of 48% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Although the company has performed relatively well, we still think there are some areas that could be improved. Still, we think that until shareholders see an improvement in EPS growth, they may find it hard to justify a pay rise for the CEO.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Inovio Pharmaceuticals that investors should think about before committing capital to this stock.

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. 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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