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A Quick Analysis On Puma Biotechnology's (NASDAQ:PBYI) CEO Compensation

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·3 min read
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This article will reflect on the compensation paid to Alan Auerbach who has served as CEO of Puma Biotechnology, Inc. (NASDAQ:PBYI) since 2011. This analysis will also assess whether Puma Biotechnology pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Puma Biotechnology

Comparing Puma Biotechnology, Inc.'s CEO Compensation With the industry

Our data indicates that Puma Biotechnology, Inc. has a market capitalization of US$397m, and total annual CEO compensation was reported as US$3.8m for the year to December 2019. That's a notable decrease of 39% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$780k.

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. This suggests that Alan Auerbach is paid more than the median for the industry. Furthermore, Alan Auerbach directly owns US$42m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$780k

US$757k

21%

Other

US$3.0m

US$5.4m

79%

Total Compensation

US$3.8m

US$6.2m

100%

Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. It's interesting to note that Puma Biotechnology allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

A Look at Puma Biotechnology, Inc.'s Growth Numbers

Puma Biotechnology, Inc.'s earnings per share (EPS) grew 60% per year over the last three years. In the last year, its revenue is down 16%.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Puma Biotechnology, Inc. Been A Good Investment?

Since shareholders would have lost about 92% over three years, some Puma Biotechnology, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Alan is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth is certainly impressive, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Although we'd stop short of calling it inappropriate, we think Alan is earning a very handsome sum.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Puma Biotechnology that investors should be aware of in a dynamic business environment.

Important note: Puma Biotechnology is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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.