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How Does Vanda Pharmaceuticals' (NASDAQ:VNDA) CEO Pay Compare With Company Performance?

Simply Wall St
·3 mins read

Mihael Polymeropoulos has been the CEO of Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) since 2003, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Vanda Pharmaceuticals.

See our latest analysis for Vanda Pharmaceuticals

How Does Total Compensation For Mihael Polymeropoulos Compare With Other Companies In The Industry?

According to our data, Vanda Pharmaceuticals Inc. has a market capitalization of US$540m, and paid its CEO total annual compensation worth US$4.3m over the year to December 2019. That's a modest increase of 6.3% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$721k.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$2.2m. Accordingly, our analysis reveals that Vanda Pharmaceuticals Inc. pays Mihael Polymeropoulos north of the industry median. What's more, Mihael Polymeropoulos holds US$11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2019

2018

Proportion (2019)

Salary

US$721k

US$700k

17%

Other

US$3.6m

US$3.3m

83%

Total Compensation

US$4.3m

US$4.0m

100%

On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. In Vanda Pharmaceuticals' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Vanda Pharmaceuticals Inc.'s Growth Numbers

Over the past three years, Vanda Pharmaceuticals Inc. has seen its earnings per share (EPS) grow by 112% per year. Its revenue is up 15% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Vanda Pharmaceuticals Inc. Been A Good Investment?

Given the total shareholder loss of 43% over three years, many shareholders in Vanda Pharmaceuticals Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we noted earlier, Vanda Pharmaceuticals pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its EPS growth, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think Mihael is earning a very handsome sum.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Vanda Pharmaceuticals (1 can't be ignored!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.