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This article will reflect on the compensation paid to Stuart Peltz who has served as CEO of PTC Therapeutics, Inc. (NASDAQ:PTCT) since 1998. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Stuart Peltz Compare With Other Companies In The Industry?
Our data indicates that PTC Therapeutics, Inc. has a market capitalization of US$4.3b, and total annual CEO compensation was reported as US$7.8m for the year to December 2019. We note that's an increase of 93% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$702k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$4.3m. Accordingly, our analysis reveals that PTC Therapeutics, Inc. pays Stuart Peltz north of the industry median. Furthermore, Stuart Peltz directly owns US$1.9m worth of shares in the company.
On an industry level, around 25% of total compensation represents salary and 75% is other remuneration. It's interesting to note that Therapeutics allocates a smaller portion of compensation to salary 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.
A Look at PTC Therapeutics, Inc.'s Growth Numbers
PTC Therapeutics, Inc. has reduced its earnings per share by 46% a year over the last three years. In the last year, its revenue is up 21%.
The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 PTC Therapeutics, Inc. Been A Good Investment?
Most shareholders would probably be pleased with PTC Therapeutics, Inc. for providing a total return of 291% over three years. 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.
As we noted earlier, Therapeutics pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But Therapeutics is growing its revenue, and total shareholder returns have also been pleasing for the last three years. The only sore spot is EPS growth, which is negative over the same period. Considering all the factors, we would have to say CEO pay is fair; however, moving forward, it would be nice to see EPS growth from the company as well.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Therapeutics that investors should be aware of in a dynamic business environment.
Switching gears from Therapeutics, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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.
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