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How Should Investors React To TRACON Pharmaceuticals, Inc.’s (NASDAQ:TCON) CEO Pay?

Simply Wall St

Charles Theuer has been the CEO of TRACON Pharmaceuticals, Inc. (NASDAQ:TCON) since 2006. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for TRACON Pharmaceuticals

How Does Charles Theuer’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that TRACON Pharmaceuticals, Inc. has a market cap of US$36m, and is paying total annual CEO compensation of US$1.4m. (This figure is for the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at US$532k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO compensation to be US$415k.

It would therefore appear that TRACON Pharmaceuticals, Inc. pays Charles Theuer 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at TRACON Pharmaceuticals has changed from year to year.

NasdaqGM:TCON CEO Compensation, March 7th 2019

Is TRACON Pharmaceuticals, Inc. Growing?

On average over the last three years, TRACON Pharmaceuticals, Inc. has grown earnings per share (EPS) by 28% each year (using a line of best fit). In the last year, its revenue is down -66%.

This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. Shareholders might be interested in this free visualization of analyst forecasts.

Has TRACON Pharmaceuticals, Inc. Been A Good Investment?

Given the total loss of 80% over three years, many shareholders in TRACON Pharmaceuticals, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We examined the amount TRACON Pharmaceuticals, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. Shareholders may want to check for free if TRACON Pharmaceuticals insiders are buying or selling shares.

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

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.