Our Take On Arena Pharmaceuticals, Inc.'s (NASDAQ:ARNA) CEO Salary
Amit Munshi has been the CEO of Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. 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.
View our latest analysis for Arena Pharmaceuticals
How Does Amit Munshi's Compensation Compare With Similar Sized Companies?
Our data indicates that Arena Pharmaceuticals, Inc. is worth US$2.7b, and total annual CEO compensation was reported as US$6.9m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$636k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$4.9m.
Thus we can conclude that Amit Munshi receives more in total compensation than the median of a group of companies in the same market, and of similar size to Arena Pharmaceuticals, Inc.. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Arena Pharmaceuticals has changed from year to year.
Is Arena Pharmaceuticals, Inc. Growing?
On average over the last three years, Arena Pharmaceuticals, Inc. has grown earnings per share (EPS) by 107% each year (using a line of best fit). It achieved revenue growth of 3190% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.
Has Arena Pharmaceuticals, Inc. Been A Good Investment?
Boasting a total shareholder return of 251% over three years, Arena Pharmaceuticals, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
We compared total CEO remuneration at Arena Pharmaceuticals, 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.
Importantly, though, the company has impressed with its earnings per share growth, 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. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Arena Pharmaceuticals (free visualization of insider trades).
If you want to buy a stock that is better than Arena Pharmaceuticals, this free list of high return, low debt companies is a great place to look.
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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