It's Unlikely That The CEO Of Mersana Therapeutics, Inc. (NASDAQ:MRSN) Will See A Huge Pay Rise This Year

In the past three years, the share price of Mersana Therapeutics, Inc. (NASDAQ:MRSN) has struggled to generate growth for its shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 11 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 discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Mersana Therapeutics

Comparing Mersana Therapeutics, Inc.'s CEO Compensation With the industry

Our data indicates that Mersana Therapeutics, Inc. has a market capitalization of US$1.0b, and total annual CEO compensation was reported as US$2.5m for the year to December 2020. Notably, that's an increase of 46% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$550k.

On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$3.3m. So it looks like Mersana Therapeutics compensates Anna Protopapas in line with the median for the industry. Furthermore, Anna Protopapas directly owns US$3.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$550k	US$533k	22%
Other	US$2.0m	US$1.2m	78%
Total Compensation	US$2.5m	US$1.7m	100%

Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. According to our research, Mersana Therapeutics has allocated a higher percentage of pay to salary in comparison to the wider industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Mersana Therapeutics, Inc.'s Growth Numbers

Mersana Therapeutics, Inc.'s earnings per share (EPS) grew 23% per year over the last three years. In the last year, its revenue is down 25%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Mersana Therapeutics, Inc. Been A Good Investment?

With a three year total loss of 0.4% for the shareholders, Mersana Therapeutics, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Mersana Therapeutics (1 is a bit unpleasant!) that you should be aware of before investing here.

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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