Is Abiomed, Inc.'s (NASDAQ:ABMD) CEO Pay Justified?

Simply Wall St

In 2004 Mike Minogue was appointed CEO of Abiomed, Inc. (NASDAQ:ABMD). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Abiomed

How Does Mike Minogue's Compensation Compare With Similar Sized Companies?

According to our data, Abiomed, Inc. has a market capitalization of US$8.3b, and paid its CEO total annual compensation worth US$19m over the year to March 2019. While we always look at total compensation first, we note that the salary component is less, at US$753k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.4m.

Thus we can conclude that Mike Minogue receives more in total compensation than the median of a group of companies in the same market, and of similar size to Abiomed, Inc.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Abiomed, below.

NasdaqGS:ABMD CEO Compensation, January 25th 2020

Is Abiomed, Inc. Growing?

On average over the last three years, Abiomed, Inc. has grown earnings per share (EPS) by 56% each year (using a line of best fit). Its revenue is up 19% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has Abiomed, Inc. Been A Good Investment?

I think that the total shareholder return of 68%, over three years, would leave most Abiomed, 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...

We compared total CEO remuneration at Abiomed, Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. So you may want to check if insiders are buying Abiomed shares with their own money (free access).

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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