Stock Analysis

It's Unlikely That The CEO Of Iterum Therapeutics plc (NASDAQ:ITRM) Will See A Huge Pay Rise This Year

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In the past three years, the share price of Iterum Therapeutics plc (NASDAQ:ITRM) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 16 June 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Iterum Therapeutics

Comparing Iterum Therapeutics plc's CEO Compensation With the industry

Our data indicates that Iterum Therapeutics plc has a market capitalization of US$319m, and total annual CEO compensation was reported as US$1.8m for the year to December 2020. We note that's an increase of 26% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$561k.

For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$2.2m. This suggests that Iterum Therapeutics remunerates its CEO largely in line with the industry average. What's more, Corey Fishman holds US$573k worth of shares in the company in their own name.

Component20202019Proportion (2020)
Salary US$561k US$551k 32%
Other US$1.2m US$841k 68%
Total CompensationUS$1.8m US$1.4m100%

Talking in terms of the industry, salary represented approximately 28% of total compensation out of all the companies we analyzed, while other remuneration made up 72% of the pie. Iterum Therapeutics pays out 32% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NasdaqCM:ITRM CEO Compensation June 11th 2021

Iterum Therapeutics plc's Growth

Iterum Therapeutics plc has seen its earnings per share (EPS) increase by 125% a year over the past three years. In the last year, its revenue has collapsed effectively to zero.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Iterum Therapeutics plc Been A Good Investment?

Few Iterum Therapeutics plc shareholders would feel satisfied with the return of -85% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 2 which make us uncomfortable) in Iterum Therapeutics we think you should know about.

Important note: Iterum Therapeutics 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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