Jay Shepard has been the CEO of Aravive, Inc. (NASDAQ:ARAV) since 2015. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Jay Shepard’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Aravive, Inc. has a market cap of US$74m, and is paying total annual CEO compensation of US$4.1m. (This number is for the twelve months until December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$541k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO compensation was US$417k.
Thus we can conclude that Jay Shepard receives more in total compensation than the median of a group of companies in the same market, and of similar size to Aravive, Inc.. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Aravive has changed over time.
Is Aravive, Inc. Growing?
Aravive, Inc. has increased its earnings per share (EPS) by an average of 29% a year, over the last three years (using a line of best fit). In the last year, its revenue is down -97%.
This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. We don’t have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Aravive, Inc. Been A Good Investment?
Given the total loss of 84% over three years, many shareholders in Aravive, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by Aravive, Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Aravive (free visualization of insider trades).
If you want to buy a stock that is better than Aravive, this free list of high return, low debt companies is a great place to look.
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