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Is Rigel Pharmaceuticals, Inc.’s (NASDAQ:RIGL) CEO Overpaid Relative To Its Peers?

Simply Wall St

Raul Rodriguez has been the CEO of Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) since 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Rigel Pharmaceuticals

How Does Raul Rodriguez’s Compensation Compare With Similar Sized Companies?

Our data indicates that Rigel Pharmaceuticals, Inc. is worth US$400m, and total annual CEO compensation is US$2.2m. (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$618k. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO compensation of that group was US$1.5m.

Thus we can conclude that Raul Rodriguez receives more in total compensation than the median of a group of companies in the same market, and of similar size to Rigel Pharmaceuticals, Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

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

NasdaqGS:RIGL CEO Compensation, March 12th 2019

Is Rigel Pharmaceuticals, Inc. Growing?

Rigel Pharmaceuticals, Inc. has increased its earnings per share (EPS) by an average of 2.4% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 893%.

I like the look of the strong year-on-year improvement in revenue. And in that context, the modest EPS improvement certainly isn’t shabby. So while I’d stop short of saying growth is absolutely outstanding, there are definitely some clear positives! You might want to check this free visual report on analyst forecasts for future earnings.

Has Rigel Pharmaceuticals, Inc. Been A Good Investment?

Rigel Pharmaceuticals, Inc. has not done too badly by shareholders, with a total return of 2.6%, over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.

In Summary…

We compared the total CEO remuneration paid by Rigel Pharmaceuticals, Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

We generally prefer to see stronger EPS growth, and we’re not particularly impressed with the total shareholder return, over the last three years. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. Shareholders may want to check for free if Rigel Pharmaceuticals insiders are buying or selling shares.

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.

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.