The underwhelming share price performance of ImmunoGen, Inc. (NASDAQ:IMGN) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 16 June 2021. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
Comparing ImmunoGen, Inc.'s CEO Compensation With the industry
Our data indicates that ImmunoGen, Inc. has a market capitalization of US$1.3b, and total annual CEO compensation was reported as US$4.6m for the year to December 2020. We note that's an increase of 17% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$714k.
On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$4.7m. From this we gather that Mark Enyedy is paid around the median for CEOs in the industry. Moreover, Mark Enyedy also holds US$2.7m worth of ImmunoGen stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. It's interesting to note that ImmunoGen allocates a smaller portion of compensation to salary in comparison 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.
ImmunoGen, Inc.'s Growth
Over the past three years, ImmunoGen, Inc. has seen its earnings per share (EPS) grow by 44% per year. It achieved revenue growth of 55% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 ImmunoGen, Inc. Been A Good Investment?
With a total shareholder return of -40% over three years, ImmunoGen, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.
Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for ImmunoGen that you should be aware of before investing.
Switching gears from ImmunoGen, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.