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Is Reata Pharmaceuticals, Inc.'s (NASDAQ:RETA) CEO Pay Fair?

Simply Wall St

J. Huff became the CEO of Reata Pharmaceuticals, Inc. (NASDAQ:RETA) in 2002. 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Reata Pharmaceuticals

How Does J. Huff's Compensation Compare With Similar Sized Companies?

Our data indicates that Reata Pharmaceuticals, Inc. is worth US$2.4b, and total annual CEO compensation was reported as US$935k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$534k. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.

Most shareholders would consider it a positive that J. Huff takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.

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

NasdaqGM:RETA CEO Compensation, October 8th 2019

Is Reata Pharmaceuticals, Inc. Growing?

Reata Pharmaceuticals, Inc. has reduced its earnings per share by an average of 76% a year, over the last three years (measured with a line of best fit). Its revenue is down 54% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has Reata Pharmaceuticals, Inc. Been A Good Investment?

Boasting a total shareholder return of 167% over three years, Reata 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...

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

J. Huff is paid less than CEOs of similar size companies. While the company isn't growing on our analysis, shareholder returns have been good in recent years. We would like to see EPS growth, but in our view it seems the CEO is remunerated reasonably. Shareholders may want to check for free if Reata Pharmaceuticals insiders are buying or selling shares.

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

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.

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. Thank you for reading.