Most Shareholders Will Probably Find That The CEO Compensation For PLx Pharma Inc. (NASDAQ:PLXP) Is Reasonable

Despite strong share price growth of 248% for PLx Pharma Inc. (NASDAQ:PLXP) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 09 November 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for PLx Pharma

How Does Total Compensation For Natasha Giordano Compare With Other Companies In The Industry?

Our data indicates that PLx Pharma Inc. has a market capitalization of US$337m, and total annual CEO compensation was reported as US$2.4m for the year to December 2020. Notably, that's an increase of 50% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$530k.

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. From this we gather that Natasha Giordano is paid around the median for CEOs in the industry.

Component	2020	2019	Proportion (2020)
Salary	US$530k	US$469k	22%
Other	US$1.9m	US$1.2m	78%
Total Compensation	US$2.4m	US$1.6m	100%

On an industry level, roughly 28% of total compensation represents salary and 72% is other remuneration. In PLx Pharma's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at PLx Pharma Inc.'s Growth Numbers

Over the last three years, PLx Pharma Inc. has shrunk its earnings per share by 10% per year. In the last year, its revenue has collapsed effectively to zero.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has PLx Pharma Inc. Been A Good Investment?

Boasting a total shareholder return of 248% over three years, PLx Pharma Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for PLx Pharma you should be aware of, and 2 of them are potentially serious.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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.

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