In 2007 John McDonough was appointed CEO of T2 Biosystems, Inc. (NASDAQ:TTOO). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does John McDonough’s Compensation Compare With Similar Sized Companies?
Our data indicates that T2 Biosystems, Inc. is worth US$127m, and total annual CEO compensation is US$1.3m. (This figure is for the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at US$425k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$432k.
Thus we can conclude that John McDonough receives more in total compensation than the median of a group of companies in the same market, and of similar size to T2 Biosystems, Inc.. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at T2 Biosystems, below.
Is T2 Biosystems, Inc. Growing?
Over the last three years T2 Biosystems, Inc. has grown its earnings per share (EPS) by an average of 16% per year (using a line of best fit). It achieved revenue growth of 125% over the last year.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Shareholders might be interested in this free visualization of analyst forecasts.
Has T2 Biosystems, Inc. Been A Good Investment?
With a three year total loss of 71%, T2 Biosystems, Inc. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by T2 Biosystems, Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. Shareholders may want to check for free if T2 Biosystems insiders are buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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