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How Should Investors React To Intra-Cellular Therapies, Inc.'s (NASDAQ:ITCI) CEO Pay?

Simply Wall St
·4 min read

Sharon Mates has been the CEO of Intra-Cellular Therapies, Inc. (NASDAQ:ITCI) since 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Intra-Cellular Therapies

How Does Sharon Mates's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Intra-Cellular Therapies, Inc. has a market cap of US$1.2b, and reported total annual CEO compensation of US$4.7m for the year to December 2019. That's a modest increase of 5.5% on the prior year year. We think total compensation is more important but we note that the CEO salary is lower, at US$745k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$3.3m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On a sector level, around 30% of total compensation represents salary and 70% is other remuneration. It's interesting to note that Intra-Cellular Therapies allocates a smaller portion of compensation to salary in comparison to the broader industry.

Thus we can conclude that Sharon Mates receives more in total compensation than the median of a group of companies in the same market, and of similar size to Intra-Cellular Therapies, Inc.. 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 Intra-Cellular Therapies, below.

NasdaqGS:ITCI CEO Compensation April 27th 2020
NasdaqGS:ITCI CEO Compensation April 27th 2020

Is Intra-Cellular Therapies, Inc. Growing?

On average over the last three years, Intra-Cellular Therapies, Inc. has shrunk earnings per share by 4.8% each year (measured with a line of best fit). It achieved revenue growth of 273% 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. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Shareholders might be interested in this free visualization of analyst forecasts.

Has Intra-Cellular Therapies, Inc. Been A Good Investment?

Boasting a total shareholder return of 69% over three years, Intra-Cellular Therapies, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We compared total CEO remuneration at Intra-Cellular Therapies, Inc. 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.

One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. Considering this fine result for investors, we daresay the CEO compensation might be apt. Taking a breather from CEO compensation, we've spotted 4 warning signs for Intra-Cellular Therapies (of which 2 make us uncomfortable!) you should know about in order to have a holistic understanding of the stock.

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.