Charles Link became the CEO of NewLink Genetics Corporation (NASDAQ:NLNK) in 2003. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Charles Link’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that NewLink Genetics Corporation has a market cap of US$60m, and is paying total annual CEO compensation of US$2.8m. (This is based on the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$594k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$473k.
Thus we can conclude that Charles Link receives more in total compensation than the median of a group of companies in the same market, and of similar size to NewLink Genetics Corporation. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at NewLink Genetics has changed over time.
Is NewLink Genetics Corporation Growing?
On average over the last three years, NewLink Genetics Corporation has grown earnings per share (EPS) by 27% each year (using a line of best fit). Its revenue is down -93% over last year.
This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important.
Has NewLink Genetics Corporation Been A Good Investment?
With a three year total loss of 86%, NewLink Genetics Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by NewLink Genetics Corporation, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling NewLink Genetics (free visualization of insider trades).
Important note: NewLink Genetics may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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