Here's Why Shareholders Will Not Be Complaining About Vertex Pharmaceuticals Incorporated's (NASDAQ:VRTX) CEO Pay Packet

Key Insights

• Vertex Pharmaceuticals to hold its Annual General Meeting on 15th of May
• CEO Reshma Kewalramani's total compensation includes salary of US$1.50m
• The overall pay is comparable to the industry average
• Vertex Pharmaceuticals' EPS grew by 14% over the past three years while total shareholder return over the past three years was 97%

It would be hard to discount the role that CEO Reshma Kewalramani has played in delivering the impressive results at Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 15th of May. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

View our latest analysis for Vertex Pharmaceuticals

How Does Total Compensation For Reshma Kewalramani Compare With Other Companies In The Industry?

Our data indicates that Vertex Pharmaceuticals Incorporated has a market capitalization of US$106b, and total annual CEO compensation was reported as US$21m for the year to December 2023. We note that's an increase of 30% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.5m.

In comparison with other companies in the American Biotechs industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$17m. From this we gather that Reshma Kewalramani is paid around the median for CEOs in the industry. What's more, Reshma Kewalramani holds US$25m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.5m	US$1.4m	7%
Other	US$19m	US$14m	93%
Total Compensation	US$21m	US$16m	100%

Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. Vertex Pharmaceuticals pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Vertex Pharmaceuticals Incorporated's Growth Numbers

Vertex Pharmaceuticals Incorporated has seen its earnings per share (EPS) increase by 14% a year over the past three years. Its revenue is up 11% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Vertex Pharmaceuticals Incorporated Been A Good Investment?

Boasting a total shareholder return of 97% over three years, Vertex Pharmaceuticals Incorporated 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.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

Shareholders may want to check for free if Vertex Pharmaceuticals insiders are buying or selling shares.

Switching gears from Vertex Pharmaceuticals, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.