Yahoo Finance It's Unlikely That Amgen Inc.'s (NASDAQ:AMGN) CEO Will See A Huge Pay Rise This Year
Key Insights
Amgen to hold its Annual General Meeting on 31st of May
CEO Bob Bradway's total compensation includes salary of US$1.79m
Total compensation is 35% above industry average
Over the past three years, Amgen's EPS fell by 17% and over the past three years, the total shareholder return was 42%
Despite strong share price growth of 42% for Amgen Inc. (NASDAQ:AMGN) 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 31st of May. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.
See our latest analysis for Amgen
How Does Total Compensation For Bob Bradway Compare With Other Companies In The Industry?
At the time of writing, our data shows that Amgen Inc. has a market capitalization of US$164b, and reported total annual CEO compensation of US$23m for the year to December 2023. That's a fairly small increase of 5.8% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.8m.
For comparison, other companies in the American Biotechs industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$17m. Hence, we can conclude that Bob Bradway is remunerated higher than the industry median. Furthermore, Bob Bradway directly owns US$192m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.8m | US$1.7m | 8% |
Other | US$21m | US$20m | 92% |
Total Compensation | US$23m | US$21m | 100% |
On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. It's interesting to note that Amgen allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Amgen Inc.'s Growth Numbers
Over the last three years, Amgen Inc. has shrunk its earnings per share by 17% per year. In the last year, its revenue is up 13%.
Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Amgen Inc. Been A Good Investment?
We think that the total shareholder return of 42%, over three years, would leave most Amgen Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
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. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for Amgen (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.
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. 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.
