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Is Karyopharm Therapeutics Inc.'s (NASDAQ:KPTI) CEO Salary Justified?

Simply Wall St

Michael Kauffman became the CEO of Karyopharm Therapeutics Inc. (NASDAQ:KPTI) in 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Karyopharm Therapeutics

How Does Michael Kauffman's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Karyopharm Therapeutics Inc. has a market cap of US$528m, and is paying total annual CEO compensation of US$2.3m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$550k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.8m.

That means Michael Kauffman receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see a visual representation of the CEO compensation at Karyopharm Therapeutics, below.

NasdaqGS:KPTI CEO Compensation, September 5th 2019
NasdaqGS:KPTI CEO Compensation, September 5th 2019

Is Karyopharm Therapeutics Inc. Growing?

On average over the last three years, Karyopharm Therapeutics Inc. has shrunk earnings per share by 3.8% each year (measured with a line of best fit). Its revenue is down -68% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has Karyopharm Therapeutics Inc. Been A Good Investment?

With a three year total loss of 7.5%, Karyopharm Therapeutics Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Remuneration for Michael Kauffman is close enough to the median pay for a CEO of a similar sized company .

Returns have been disappointing and the company is not growing its earnings per share. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. Whatever your view on compensation, you might want to check if insiders are buying or selling Karyopharm Therapeutics shares (free trial).

Important note: Karyopharm Therapeutics 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.

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.