In 2014 Matt Pauls was appointed CEO of Strongbridge Biopharma plc (NASDAQ:SBBP). 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Matt Pauls's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Strongbridge Biopharma plc has a market cap of US$249m, and is paying total annual CEO compensation of US$2.7m. (This number is for the twelve months until December 2018). We note that's an increase of 63% above last year. We think total compensation is more important but we note that the CEO salary is lower, at US$540k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$100m to US$400m. The median total CEO compensation was US$1.0m.
It would therefore appear that Strongbridge Biopharma plc pays Matt Pauls more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Strongbridge Biopharma has changed from year to year.
Is Strongbridge Biopharma plc Growing?
Strongbridge Biopharma plc has increased its earnings per share (EPS) by an average of 19% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 156%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.
Has Strongbridge Biopharma plc Been A Good Investment?
Since shareholders would have lost about 6.1% over three years, some Strongbridge Biopharma plc shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Strongbridge Biopharma plc with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. This doesn't look great when you consider CEO remuneration is up on last year. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Strongbridge Biopharma (free visualization of insider trades).
Important note: Strongbridge Biopharma may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.