Despite strong share price growth of 61% for CRISPR Therapeutics AG (NASDAQ:CRSP) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 10 June 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
How Does Total Compensation For Sam Kulkarni Compare With Other Companies In The Industry?
According to our data, CRISPR Therapeutics AG has a market capitalization of US$8.3b, and paid its CEO total annual compensation worth US$9.1m over the year to December 2020. We note that's a decrease of 44% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$625k.
On comparing similar companies from the same industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$6.2m. Hence, we can conclude that Sam Kulkarni is remunerated higher than the industry median. Moreover, Sam Kulkarni also holds US$20m worth of CRISPR Therapeutics stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 19% of total compensation represents salary, while the remainder of 81% is other remuneration. CRISPR Therapeutics 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.
CRISPR Therapeutics AG's Growth
Over the last three years, CRISPR Therapeutics AG has shrunk its earnings per share by 14% per year. In the last year, the company lost virtually all of its revenue.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has CRISPR Therapeutics AG Been A Good Investment?
Boasting a total shareholder return of 61% over three years, CRISPR Therapeutics AG has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
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. We did our research and spotted 3 warning signs for CRISPR Therapeutics that investors should look into moving forward.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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