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Does La Jolla Pharmaceutical Company’s (NASDAQ:LJPC) CEO Pay Reflect Performance?

Simply Wall St

In 2012 George Tidmarsh was appointed CEO of La Jolla Pharmaceutical Company (NASDAQ:LJPC). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for La Jolla Pharmaceutical

How Does George Tidmarsh’s Compensation Compare With Similar Sized Companies?

Our data indicates that La Jolla Pharmaceutical Company is worth US$179m, and total annual CEO compensation is US$6.5m. (This is based on the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at US$571k. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO compensation of that group was US$931k.

Thus we can conclude that George Tidmarsh receives more in total compensation than the median of a group of companies in the same market, and of similar size to La Jolla Pharmaceutical Company. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at La Jolla Pharmaceutical, below.

NasdaqCM:LJPC CEO Compensation, March 7th 2019
NasdaqCM:LJPC CEO Compensation, March 7th 2019

Is La Jolla Pharmaceutical Company Growing?

La Jolla Pharmaceutical Company has reduced its earnings per share by an average of 34% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 2130%.

Investors should note that, over three years, earnings per share are down. 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. You might want to check this free visual report on analyst forecasts for future earnings.

Has La Jolla Pharmaceutical Company Been A Good Investment?

With a three year total loss of 65%, La Jolla Pharmaceutical Company would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared total CEO remuneration at La Jolla Pharmaceutical Company with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Although we’d stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at La Jolla Pharmaceutical.

If you want to buy a stock that is better than La Jolla Pharmaceutical, this free list of high return, low debt companies is a great place to look.

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.