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Is Conatus Pharmaceuticals Inc.'s (NASDAQ:CNAT) CEO Paid Enough Relative To Peers?

Simply Wall St

In 2005 Steven Mento was appointed CEO of Conatus Pharmaceuticals Inc. (NASDAQ:CNAT). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Conatus Pharmaceuticals

How Does Steven Mento's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Conatus Pharmaceuticals Inc. has a market cap of US$12m, and reported total annual CEO compensation of US$1.3m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$537k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$510k.

As you can see, Steven Mento is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Conatus Pharmaceuticals Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Conatus Pharmaceuticals, below.

NasdaqGM:CNAT CEO Compensation, November 3rd 2019

Is Conatus Pharmaceuticals Inc. Growing?

On average over the last three years, Conatus Pharmaceuticals Inc. has grown earnings per share (EPS) by 36% each year (using a line of best fit). In the last year, its revenue is down 11%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. You might want to check this free visual report on analyst forecasts for future earnings.

Has Conatus Pharmaceuticals Inc. Been A Good Investment?

Since shareholders would have lost about 77% over three years, some Conatus Pharmaceuticals Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We examined the amount Conatus Pharmaceuticals Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Conatus Pharmaceuticals (free visualization of insider trades).

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.

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.