Here's Why Shareholders May Want To Be Cautious With Increasing Vericel Corporation's (NASDAQ:VCEL) CEO Pay Packet
Key Insights
Vericel's Annual General Meeting to take place on 1st of May
Salary of US$790.0k is part of CEO Nick Colangelo's total remuneration
Total compensation is similar to the industry average
Vericel's three-year loss to shareholders was 26% while its EPS was down 60% over the past three years
The underwhelming share price performance of Vericel Corporation (NASDAQ:VCEL) in the past three years would have disappointed many shareholders. Per share earnings growth is also lacking, despite revenue growth. Shareholders will have a chance to take their concerns to the board at the next AGM on 1st of May and vote on resolutions including executive compensation, which studies show may have an impact on company performance. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.
Check out our latest analysis for Vericel
Comparing Vericel Corporation's CEO Compensation With The Industry
Our data indicates that Vericel Corporation has a market capitalization of US$2.2b, and total annual CEO compensation was reported as US$7.1m for the year to December 2023. Notably, that's a decrease of 19% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$790k.
On examining similar-sized companies in the American Biotechs 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$7.0m. From this we gather that Nick Colangelo is paid around the median for CEOs in the industry. What's more, Nick Colangelo holds US$8.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$790k | US$760k | 11% |
Other | US$6.3m | US$7.9m | 89% |
Total Compensation | US$7.1m | US$8.7m | 100% |
Speaking on an industry level, nearly 24% of total compensation represents salary, while the remainder of 76% is other remuneration. Vericel pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Vericel Corporation's Growth Numbers
Vericel Corporation has reduced its earnings per share by 60% a year over the last three years. In the last year, its revenue is up 20%.
Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Vericel Corporation Been A Good Investment?
With a three year total loss of 26% for the shareholders, Vericel Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.
Whatever your view on compensation, you might want to check if insiders are buying or selling Vericel shares (free trial).
Switching gears from Vericel, 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.
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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.
