Is Allergan plc (NYSE:AGN) Excessively Paying Its CEO?

Brent Saunders became the CEO of Allergan plc (NYSE:AGN) in 2014. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Allergan

How Does Brent Saunders’s Compensation Compare With Similar Sized Companies?

Our data indicates that Allergan plc is worth US$48b, and total annual CEO compensation is US$33m. (This figure is for the year to December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.2m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.

As you can see, Brent Saunders is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Allergan plc is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Allergan, below.

NYSE:AGN CEO Compensation, April 18th 2019
NYSE:AGN CEO Compensation, April 18th 2019

Is Allergan plc Growing?

On average over the last three years, Allergan plc has grown earnings per share (EPS) by 2.2% each year (using a line of best fit). In the last year, its revenue changed by just -1.0%.

I would prefer it if there was revenue growth, but the improvement in EPS is good. It’s hard to reach a conclusion about business performance right now. This may be one to watch. Shareholders might be interested in this free visualization of analyst forecasts.

Has Allergan plc Been A Good Investment?

With a three year total loss of 34%, Allergan plc would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared total CEO remuneration at Allergan plc with the amount paid at other large companies. Our data suggests that it pays above the median CEO pay within that group.

Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Considering this, we have the opinion that the CEO pay is more on the generous side, than the modest side. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Allergan.

Important note: Allergan may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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