Chip Scarlett has been the CEO of Geron Corporation ( NASDAQ:GERN ) since 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Chip Scarlett's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Geron Corporation has a market cap of US$271m, and is paying total annual CEO compensation of US$2.8m. (This is based on the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$667k. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$1.2m.
As you can see, Chip Scarlett is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Geron Corporation is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Geron has changed from year to year.
Is Geron Corporation Growing?
On average over the last three years, Geron Corporation has shrunk earnings per share by 13% each year (measured with a line of best fit). Its revenue is down -21% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Geron Corporation Been A Good Investment?
Since shareholders would have lost about 36% over three years, some Geron Corporation shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We compared total CEO remuneration at Geron Corporation with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
Just as bad, share price gains for investors have failed to materialize, over the same period. This analysis suggests to us that the CEO is paid too generously! So you may want to check if insiders are buying Geron shares with their own money (free access).
Important note: Geron 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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