Stock Analysis

We Think Some Shareholders May Hesitate To Increase XBiotech Inc.'s (NASDAQ:XBIT) CEO Compensation

  •  Updated
Source: Shutterstock

Under the guidance of CEO John Simard, XBiotech Inc. (NASDAQ:XBIT) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 22 June 2021. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for XBiotech

How Does Total Compensation For John Simard Compare With Other Companies In The Industry?

According to our data, XBiotech Inc. has a market capitalization of US$487m, and paid its CEO total annual compensation worth US$12m over the year to December 2020. We note that's an increase of 10% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$684k.

On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$2.3m. Hence, we can conclude that John Simard is remunerated higher than the industry median. Furthermore, John Simard directly owns US$69m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$684k US$591k 6%
Other US$11m US$10m 94%
Total CompensationUS$12m US$11m100%

Speaking on an industry level, nearly 20% of total compensation represents salary, while the remainder of 80% is other remuneration. In XBiotech's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NasdaqGS:XBIT CEO Compensation June 16th 2021

XBiotech Inc.'s Growth

XBiotech Inc.'s earnings per share (EPS) grew 72% per year over the last three years. In the last year, its revenue is up 185%.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has XBiotech Inc. Been A Good Investment?

Boasting a total shareholder return of 262% over three years, XBiotech Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for XBiotech that investors should think about before committing capital to this stock.

Important note: XBiotech 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.

If you decide to trade XBiotech, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

Valuation is complex, but we're helping make it simple.

Find out whether XBiotech is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis