We Think The Compensation For XOMA Corporation's (NASDAQ:XOMA) CEO Looks About Right

Under the guidance of CEO Jim Neal, XOMA Corporation (NASDAQ:XOMA) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 19 May 2021. We present our case of why we think CEO compensation looks fair.

Check out our latest analysis for XOMA

How Does Total Compensation For Jim Neal Compare With Other Companies In The Industry?

According to our data, XOMA Corporation has a market capitalization of US$355m, and paid its CEO total annual compensation worth US$1.7m over the year to December 2020. Notably, that's an increase of 14% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$534k.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$2.3m. So it looks like XOMA compensates Jim Neal in line with the median for the industry. What's more, Jim Neal holds US$775k worth of shares in the company in their own name.

Component	2020	2019	Proportion (2020)
Salary	US$534k	US$499k	31%
Other	US$1.2m	US$981k	69%
Total Compensation	US$1.7m	US$1.5m	100%

On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. According to our research, XOMA has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at XOMA Corporation's Growth Numbers

XOMA Corporation has reduced its earnings per share by 39% a year over the last three years. In the last year, its revenue is up 162%.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has XOMA Corporation Been A Good Investment?

XOMA Corporation has generated a total shareholder return of 22% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Although the company has performed relatively well, we still think there are some areas that could be improved. Despite robust revenue growth, until EPS growth improves, shareholders may be hesitant to increase CEO pay by too much.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for XOMA (1 is significant!) that you should be aware of before investing here.

Important note: XOMA 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.

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This article by Simply Wall St is general in nature. 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.
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