Amit Munshi became the CEO of Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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.
How Does Amit Munshi's Compensation Compare With Similar Sized Companies?
Our data indicates that Arena Pharmaceuticals, Inc. is worth US$2.6b, and total annual CEO compensation is US$6.9m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$636k. 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.
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.
You can see a visual representation of the CEO compensation at Arena Pharmaceuticals, below.
Is Arena Pharmaceuticals, Inc. Growing?
On average over the last three years, Arena Pharmaceuticals, Inc. has grown earnings per share (EPS) by 102% each year (using a line of best fit). In the last year, its revenue is up 3361%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. It could be important to check this free visual depiction of what analysts expect for the future.
Has Arena Pharmaceuticals, Inc. Been A Good Investment?
Boasting a total shareholder return of 234% over three years, Arena Pharmaceuticals, Inc. has done well by shareholders. 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.
We compared the total CEO remuneration paid by Arena Pharmaceuticals, Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Arena Pharmaceuticals shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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