We Think Organogenesis Holdings Inc.'s (NASDAQ:ORGO) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Organogenesis Holdings to hold its Annual General Meeting on 20th of June
• Salary of US$908.7k is part of CEO Gary Gillheeney's total remuneration
• The overall pay is 98% above the industry average
• Organogenesis Holdings' three-year loss to shareholders was 85% while its EPS was down 51% over the past three years

Organogenesis Holdings Inc. (NASDAQ:ORGO) has not performed well recently and CEO Gary Gillheeney will probably need to up their game. At the upcoming AGM on 20th of June, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Organogenesis Holdings

Comparing Organogenesis Holdings Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Organogenesis Holdings Inc. has a market capitalization of US$346m, and reported total annual CEO compensation of US$6.2m for the year to December 2023. That's just a smallish increase of 3.9% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$909k.

For comparison, other companies in the American Biotechs industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$3.2m. Accordingly, our analysis reveals that Organogenesis Holdings Inc. pays Gary Gillheeney north of the industry median. What's more, Gary Gillheeney holds US$2.1m worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	US$909k	US$883k	15%
Other	US$5.3m	US$5.1m	85%
Total Compensation	US$6.2m	US$6.0m	100%

Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. It's interesting to note that Organogenesis Holdings allocates a smaller portion of compensation to salary in comparison to the broader 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 Organogenesis Holdings Inc.'s Growth Numbers

Over the last three years, Organogenesis Holdings Inc. has shrunk its earnings per share by 51% per year. In the last year, its revenue is down 5.6%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Organogenesis Holdings Inc. Been A Good Investment?

With a total shareholder return of -85% over three years, Organogenesis Holdings Inc. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Organogenesis Holdings that investors should look into moving forward.

Important note: Organogenesis Holdings 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com