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Does Cara Therapeutics, Inc.'s (NASDAQ:CARA) CEO Salary Reflect Performance?

Simply Wall St

In 2004 Derek Chalmers was appointed CEO of Cara Therapeutics, Inc. (NASDAQ:CARA). 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 process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Cara Therapeutics

How Does Derek Chalmers's Compensation Compare With Similar Sized Companies?

Our data indicates that Cara Therapeutics, Inc. is worth US$752m, and total annual CEO compensation was reported as US$2.8m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$542k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.6m.

So Derek Chalmers receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at Cara Therapeutics has changed over time.

NasdaqGM:CARA CEO Compensation, February 3rd 2020

Is Cara Therapeutics, Inc. Growing?

Cara Therapeutics, Inc. has reduced its earnings per share by an average of 2.3% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 163% over the last year.

The reduction in earnings per share, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. It could be important to check this free visual depiction of what analysts expect for the future.

Has Cara Therapeutics, Inc. Been A Good Investment?

Given the total loss of 1.8% over three years, many shareholders in Cara Therapeutics, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Derek Chalmers is paid around the same as most CEOs of similar size companies.

The company cannot boast particularly strong per share growth. And we think the shareholder returns - over three years - have been underwhelming. So many would argue that the CEO is certainly not underpaid. Shareholders may want to check for free if Cara Therapeutics insiders are buying or selling shares.

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.

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.