John McDonough became the CEO of T2 Biosystems Inc (NASDAQ:TTOO) in 2007. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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.
View our latest analysis for T2 Biosystems
How Does John McDonough’s Compensation Compare With Similar Sized Companies?
Our data indicates that T2 Biosystems Inc is worth US$196m, and total annual CEO compensation is US$1.3m. (This number is for the twelve months until 2017). While we always look at total compensation first, we note that the salary component is less, at US$425k. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO compensation of that group was US$941k.
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 better assess whether the pay is overly generous by looking into the underlying business performance.
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 12% per year. It achieved revenue growth of 165% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly.
It could be important to check this free visual depiction of what analysts expect for the future.
Has T2 Biosystems Inc Been A Good Investment?
Given the total loss of 52% over three years, many shareholders in T2 Biosystems Inc are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
In Summary…
We compared the total CEO remuneration paid by T2 Biosystems 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.
However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Shareholders may want to check for free if T2 Biosystems insiders are buying or selling shares.
Or you might prefer this data-rich interactive visualization of historic revenue and earnings.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.