Key Insights

• Schrödinger's Annual General Meeting to take place on 18th of June
• CEO Ramy Farid's total compensation includes salary of US$677.0k
• The overall pay is 60% below the industry average
• Schrödinger's three-year loss to shareholders was 72% while its EPS grew by 24% over the past three years

Performance at Schrödinger, Inc. (NASDAQ:SDGR) has been rather uninspiring recently and shareholders may be wondering how CEO Ramy Farid plans to fix this. At the next AGM coming up on 18th of June, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

How Does Total Compensation For Ramy Farid Compare With Other Companies In The Industry?

Our data indicates that Schrödinger, Inc. has a market capitalization of US$1.6b, and total annual CEO compensation was reported as US$3.1m for the year to December 2023. Notably, that's a decrease of 20% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$677k.

In comparison with other companies in the American Healthcare Services industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$7.8m. Accordingly, Schrödinger pays its CEO under the industry median. What's more, Ramy Farid holds US$3.9m 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, around 34% of total compensation represents salary and 66% is other remuneration. Schrödinger sets aside a smaller share of compensation for salary, in comparison to the overall 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 Schrödinger, Inc.'s Growth Numbers

Schrödinger, Inc.'s earnings per share (EPS) grew 24% per year over the last three years. It saw its revenue drop 4.4% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Schrödinger, Inc. Been A Good Investment?

With a total shareholder return of -72% over three years, Schrödinger, Inc. shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders have earned a negative share price return is certainly disconcerting. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key focus for the board and management will be how to align the share price with fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Schrödinger that investors should think about before committing capital to this 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.