Key Insights

• Vertex Pharmaceuticals to hold its Annual General Meeting on 15th of May
• CEO Reshma Kewalramani's total compensation includes salary of US$1.50m
• The overall pay is comparable to the industry average
• Vertex Pharmaceuticals' EPS grew by 14% over the past three years while total shareholder return over the past three years was 97%

We have been pretty impressed with the performance at Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) recently and CEO Reshma Kewalramani deserves a mention for their role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 15th of May. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

How Does Total Compensation For Reshma Kewalramani Compare With Other Companies In The Industry?

Our data indicates that Vertex Pharmaceuticals Incorporated has a market capitalization of US$106b, and total annual CEO compensation was reported as US$21m for the year to December 2023. We note that's an increase of 30% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.5m.

In comparison with other companies in the American Biotechs industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$17m. From this we gather that Reshma Kewalramani is paid around the median for CEOs in the industry. What's more, Reshma Kewalramani holds US$25m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. It's interesting to note that Vertex Pharmaceuticals 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.

A Look at Vertex Pharmaceuticals Incorporated's Growth Numbers

Over the past three years, Vertex Pharmaceuticals Incorporated has seen its earnings per share (EPS) grow by 14% per year. It achieved revenue growth of 11% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Vertex Pharmaceuticals Incorporated Been A Good Investment?

We think that the total shareholder return of 97%, over three years, would leave most Vertex Pharmaceuticals Incorporated 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...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

Shareholders may want to check for free if Vertex Pharmaceuticals insiders are buying or selling shares.

Switching gears from Vertex Pharmaceuticals, 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.