Stock Analysis

What Can We Learn About MEI Pharma's (NASDAQ:MEIP) CEO Compensation?

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NasdaqCM:MEIP
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Dan Gold has been the CEO of MEI Pharma, Inc. (NASDAQ:MEIP) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for MEI Pharma.

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Comparing MEI Pharma, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that MEI Pharma, Inc. has a market capitalization of US$321m, and reported total annual CEO compensation of US$2.3m for the year to June 2020. Notably, that's an increase of 22% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$650k.

On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$2.1m. This suggests that MEI Pharma remunerates its CEO largely in line with the industry average. Moreover, Dan Gold also holds US$1.1m worth of MEI Pharma stock directly under their own name.

Component20202019Proportion (2020)
Salary US$650k US$610k 29%
Other US$1.6m US$1.2m 71%
Total CompensationUS$2.3m US$1.9m100%

On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. It's interesting to note that MEI Pharma pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
NasdaqCM:MEIP CEO Compensation December 11th 2020

MEI Pharma, Inc.'s Growth

MEI Pharma, Inc.'s earnings per share (EPS) grew 12% per year over the last three years. In the last year, its revenue is up 467%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing 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 MEI Pharma, Inc. Been A Good Investment?

Boasting a total shareholder return of 34% over three years, MEI Pharma, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As previously discussed, Dan is compensated close to the median for companies of its size, and which belong to the same industry. Few would be critical of the leadership, since returns have been juicy and EPS are moving in the right direction. Indeed, many might consider that Dan is compensated rather modestly, given the solid company performance! In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for MEI Pharma (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

Switching gears from MEI Pharma, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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