It would be hard to discount the role that CEO Gene Kinney has played in delivering the impressive results at Prothena Corporation plc (NASDAQ:PRTA) recently. Coming up to the next AGM on 18 May 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.
How Does Total Compensation For Gene Kinney Compare With Other Companies In The Industry?
According to our data, Prothena Corporation plc has a market capitalization of US$1.0b, and paid its CEO total annual compensation worth US$3.4m over the year to December 2020. That's a modest increase of 6.7% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$554k.
In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$3.4m. This suggests that Prothena remunerates its CEO largely in line with the industry average. Moreover, Gene Kinney also holds US$294k worth of Prothena stock directly under their own name.
Speaking on an industry level, nearly 20% of total compensation represents salary, while the remainder of 80% is other remuneration. Prothena 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.
Prothena Corporation plc's Growth
Prothena Corporation plc has seen its earnings per share (EPS) increase by 29% a year over the past three years. In the last year, its revenue is up 4.9%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Prothena Corporation plc Been A Good Investment?
Boasting a total shareholder return of 39% over three years, Prothena Corporation plc has done well by shareholders. 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.
Given the improved performance, shareholders may be more forgiving of CEO compensation in the upcoming AGM. Seeing that earnings growth and share price performance seems to be on the right path, the more pressing focus for shareholders at the AGM may be how the board and management plans to turn the company into a sustainably profitable one.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Prothena (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.
Important note: Prothena 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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