In 2002 J. Huff was appointed CEO of Reata Pharmaceuticals, Inc. (NASDAQ:RETA). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does J. Huff's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Reata Pharmaceuticals, Inc. has a market cap of US$2.7b, and is paying total annual CEO compensation of US$935k. (This number is for the twelve months until December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$534k. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.
Most shareholders would consider it a positive that J. Huff takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Reata Pharmaceuticals has changed from year to year.
Is Reata Pharmaceuticals, Inc. Growing?
Reata Pharmaceuticals, Inc. has reduced its earnings per share by an average of 81% a year, over the last three years (measured with a line of best fit). Its revenue is down -58% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Reata Pharmaceuticals, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Reata Pharmaceuticals, Inc. for providing a total return of 471% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Reata Pharmaceuticals, Inc. is currently paying its CEO below what is normal for companies of its size.
It's well worth noting that while J. Huff is paid less than most company leaders (at similar sized companies), there isn't much EPS growth. Having said that, returns to shareholders have been great. So, while it would be nice to have EPS growth, on our analysis the CEO compensation is not an issue. So you may want to check if insiders are buying Reata Pharmaceuticals shares with their own money (free access).
If you want to buy a stock that is better than Reata Pharmaceuticals, this free list of high return, low debt companies is a great place to look.
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 email@example.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.