Yahoo Finance Does Altimmune Inc’s (NASDAQ:ALT) CEO Salary Reflect Performance?
Leading Altimmune Inc (NASDAQ:ALT) as the CEO, Bill Enright took the company to a valuation of US$9.21M. Understanding how CEOs are incentivised to run and grow their company is an important aspect of investing in a stock. This is because, if incentives are aligned, more value is created for shareholders which directly impacts your returns as an investor. Today we will assess Enright’s pay and compare this to the company’s performance over the same period, as well as measure it against other US CEOs leading companies of similar size and profitability. Check out our latest analysis for Altimmune
What has been the trend in ALT’s earnings?
ALT can create value to shareholders by increasing its profitability, which in turn is reflected into the share price and the investor’s ability to sell their shares at higher capital gains. Most recently, ALT released negative earnings of -US$51.72M , which is a further decline from prior year’s loss of -US$14.48M. Moreover, on average, ALT has been loss-making in the past, with a 5-year average EPS of -US$2.01. In the situation of negative earnings, the company may be facing a period of reinvestment and growth, or it can be an indication of some headwind. Regardless, CEO compensation should emulate the current condition of the business. In the latest financial report, Enright’s total remuneration dropped by a significant rate of -34.60%, to US$333.88K.
Is ALT overpaying the CEO?
Though there is no cookie-cutter approach, since remuneration should be tailored to the specific company and market, we can gauge a high-level thresold to see if ALT is an outlier. This exercise helps investors ask the right question about Enright’s incentive alignment. On average, a US small-cap is worth around $1B, produces earnings of $96M, and remunerates its CEO at roughly $2.7M per year. Typically I would use earnings and market cap to account for variations in performance, however, ALT’s negative earnings lower the effectiveness of this method. Analyzing the range of remuneration for small-cap executives, it seems like Enright is remunerated sensibly relative to peers. Putting everything together, though ALT is loss-making, it seems like the CEO’s pay is sound.
Next Steps:
Board members are the voice of shareholders. Although CEO pay doesn’t necessarily make a big dent in your investment thesis in ALT, proper governance on behalf of your investment should be a key concern. These decisions made by top management and directors flow down into financials which impact returns to investors. If you have not done so already, I urge you to complete your research by taking a look at the following:
Governance: To find out more about ALT’s governance, look through our infographic report of the company’s board and management.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ALT? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
