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Is Radius Health, Inc.'s (NASDAQ:RDUS) CEO Salary Justified?

Simply Wall St

Jesper Høiland has been the CEO of Radius Health, Inc. (NASDAQ:RDUS) since 2017. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Radius Health

How Does Jesper Høiland's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Radius Health, Inc. has a market cap of US$914m, and reported total annual CEO compensation of US$5.4m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$624k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$2.6m.

As you can see, Jesper Høiland is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Radius Health, Inc. is paying too much. 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 Radius Health, below.

NasdaqGM:RDUS CEO Compensation, January 9th 2020

Is Radius Health, Inc. Growing?

Radius Health, Inc. has increased its earnings per share (EPS) by an average of 3.3% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 110%.

It's great to see that revenue growth is strong. And in that context, the modest EPS improvement certainly isn't shabby. I'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. It could be important to check this free visual depiction of what analysts expect for the future.

Has Radius Health, Inc. Been A Good Investment?

Given the total loss of 55% over three years, many shareholders in Radius Health, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared total CEO remuneration at Radius Health, Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. So you may want to check if insiders are buying Radius Health shares with their own money (free access).

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.

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