Yahoo Finance Shareholders Will Most Likely Find Revolution Medicines, Inc.'s (NASDAQ:RVMD) CEO Compensation Acceptable
Key Insights
Revolution Medicines will host its Annual General Meeting on 20th of June
Total pay for CEO Mark Goldsmith includes US$631.1k salary
The overall pay is comparable to the industry average
Over the past three years, Revolution Medicines' EPS fell by 19% and over the past three years, the total shareholder return was 17%
Despite positive share price growth of 17% for Revolution Medicines, Inc. (NASDAQ:RVMD) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 20th of June may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
See our latest analysis for Revolution Medicines
How Does Total Compensation For Mark Goldsmith Compare With Other Companies In The Industry?
Our data indicates that Revolution Medicines, Inc. has a market capitalization of US$6.6b, and total annual CEO compensation was reported as US$10m for the year to December 2023. We note that's an increase of 44% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$631k.
On comparing similar companies from the American Biotechs industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$12m. So it looks like Revolution Medicines compensates Mark Goldsmith in line with the median for the industry. Moreover, Mark Goldsmith also holds US$25m worth of Revolution Medicines stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$631k | US$607k | 6% |
Other | US$9.8m | US$6.6m | 94% |
Total Compensation | US$10m | US$7.2m | 100% |
On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. Revolution Medicines 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.
Revolution Medicines, Inc.'s Growth
Revolution Medicines, Inc. has reduced its earnings per share by 19% a year over the last three years. In the last year, its revenue is down 87%.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Revolution Medicines, Inc. Been A Good Investment?
Revolution Medicines, Inc. has served shareholders reasonably well, with a total return of 17% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
To Conclude...
Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these 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.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Revolution Medicines you should be aware of, and 1 of them is significant.
Important note: Revolution Medicines 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
