Stock Analysis

We Think The Compensation For Insmed Incorporated's (NASDAQ:INSM) CEO Looks About Right

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NasdaqGS:INSM
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CEO Will Lewis has done a decent job of delivering relatively good performance at Insmed Incorporated (NASDAQ:INSM) recently. 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 12 May 2021. Here is our take on why we think the CEO compensation looks appropriate.

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Comparing Insmed Incorporated's CEO Compensation With the industry

At the time of writing, our data shows that Insmed Incorporated has a market capitalization of US$3.2b, and reported total annual CEO compensation of US$6.2m for the year to December 2020. We note that's a decrease of 14% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$660k.

On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$6.3m. This suggests that Insmed remunerates its CEO largely in line with the industry average. What's more, Will Lewis holds US$5.1m 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$660k US$641k 11%
Other US$5.5m US$6.5m 89%
Total CompensationUS$6.2m US$7.2m100%

Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. It's interesting to note that Insmed 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.

ceo-compensation
NasdaqGS:INSM CEO Compensation May 6th 2021

A Look at Insmed Incorporated's Growth Numbers

Insmed Incorporated has seen its earnings per share (EPS) increase by 7.7% a year over the past three years. In the last year, its revenue is up 20%.

We would argue that the modest growth in revenue is a notable positive. And the modest growth in EPS isn't bad, either. So while performance isn't amazing, we think it really does seem quite respectable. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Insmed Incorporated Been A Good Investment?

Insmed Incorporated has generated a total shareholder return of 14% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Insmed that investors should think about before committing capital to this stock.

Important note: Insmed 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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