Henry Ji has been the CEO of Sorrento Therapeutics, Inc. (NASDAQ:SRNE) since 2012. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Henry Ji’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Sorrento Therapeutics, Inc. has a market cap of US$264m, and is paying total annual CEO compensation of US$4.5m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$670k. We looked at a group of companies with market capitalizations from US$100m to US$400m, and the median CEO total compensation was US$1.2m.
It would therefore appear that Sorrento Therapeutics, Inc. pays Henry Ji more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Sorrento Therapeutics has changed from year to year.
Is Sorrento Therapeutics, Inc. Growing?
On average over the last three years, Sorrento Therapeutics, Inc. has shrunk earnings per share by 12% each year (measured with a line of best fit). Its revenue is down -84% over last year.
Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
Has Sorrento Therapeutics, Inc. Been A Good Investment?
Since shareholders would have lost about 69% over three years, some Sorrento Therapeutics, Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We compared the total CEO remuneration paid by Sorrento Therapeutics, Inc., 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.Earnings per share have not grown in three years, and the revenue growth fails to impress us.
Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! So you may want to check if insiders are buying Sorrento Therapeutics shares with their own money (free access).
Important note: Sorrento Therapeutics 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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