We Think Shareholders Will Probably Be Generous With Oramed Pharmaceuticals Inc.'s (NASDAQ:ORMP) CEO Compensation

Simply Wall St
August 23, 2021
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We have been pretty impressed with the performance at Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) recently and CEO Nadav Kidron deserves a mention for their role in it. Coming up to the next AGM on 30 August 2021, shareholders would be keeping this in mind. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

See our latest analysis for Oramed Pharmaceuticals

Comparing Oramed Pharmaceuticals Inc.'s CEO Compensation With the industry

Our data indicates that Oramed Pharmaceuticals Inc. has a market capitalization of US$515m, and total annual CEO compensation was reported as US$1.8m for the year to August 2020. That's a notable increase of 14% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$439k.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$2.0m. This suggests that Oramed Pharmaceuticals remunerates its CEO largely in line with the industry average. What's more, Nadav Kidron holds US$10m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$439k US$419k 25%
Other US$1.3m US$1.1m 75%
Total CompensationUS$1.8m US$1.6m100%

On an industry level, roughly 28% of total compensation represents salary and 72% is other remuneration. Oramed Pharmaceuticals sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NasdaqCM:ORMP CEO Compensation August 24th 2021

A Look at Oramed Pharmaceuticals Inc.'s Growth Numbers

Oramed Pharmaceuticals Inc. has seen its earnings per share (EPS) increase by 15% a year over the past three years. Revenue was pretty flat on last year.

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 Oramed Pharmaceuticals Inc. Been A Good Investment?

Most shareholders would probably be pleased with Oramed Pharmaceuticals Inc. for providing a total return of 230% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. However, despite the strong growth in earnings and share price growth, the focus for shareholders would be how the company plans to steer the company towards sustainable profitability in the near future.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 4 warning signs for Oramed Pharmaceuticals that investors should be aware of in a dynamic business environment.

Important note: Oramed Pharmaceuticals 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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