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Is Arrowhead Pharmaceuticals, Inc.'s (NASDAQ:ARWR) CEO Salary Justified?

Simply Wall St

Chris Anzalone became the CEO of Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) in 2007. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Arrowhead Pharmaceuticals

How Does Chris Anzalone's Compensation Compare With Similar Sized Companies?

According to our data, Arrowhead Pharmaceuticals, Inc. has a market capitalization of US$2.7b, and paid its CEO total annual compensation worth US$2.2m over the year to September 2019. We note that's an increase of 37% above last year. While we always look at total compensation first, we note that the salary component is less, at US$674k. 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$2.0b to US$6.4b, and the median CEO total compensation was US$5.2m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.

You can see, below, how CEO compensation at Arrowhead Pharmaceuticals has changed over time.

NasdaqGS:ARWR CEO Compensation, March 15th 2020

Is Arrowhead Pharmaceuticals, Inc. Growing?

Over the last three years Arrowhead Pharmaceuticals, Inc. has grown its earnings per share (EPS) by an average of 92% per year (using a line of best fit). Its revenue is up 246% over last year.

This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Shareholders might be interested in this free visualization of analyst forecasts.

Has Arrowhead Pharmaceuticals, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Arrowhead Pharmaceuticals, Inc. for providing a total return of 1184% over three years. 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...

It appears that Arrowhead Pharmaceuticals, Inc. remunerates its CEO below most similar sized companies.

Since the business is growing, many would argue this suggests the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Chris Anzalone deserves a raise! It's not often we see shareholders do so well, and yet the CEO is paid modestly. But it is even better if company insiders are also buying shares with their own money. On another note, we've spotted 2 warning signs for Arrowhead Pharmaceuticals that investors should look into moving forward.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.