Mike Raab became the CEO of Ardelyx, Inc. (NASDAQ:ARDX) in 2009. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Mike Raab's Compensation Compare With Similar Sized Companies?
According to our data, Ardelyx, Inc. has a market capitalization of US$314m, and paid its CEO total annual compensation worth US$4.2m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$575k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$200m to US$800m, we found the median CEO total compensation was US$1.8m.
Thus we can conclude that Mike Raab receives more in total compensation than the median of a group of companies in the same market, and of similar size to Ardelyx, 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.
You can see a visual representation of the CEO compensation at Ardelyx, below.
Is Ardelyx, Inc. Growing?
Ardelyx, Inc. has increased its earnings per share (EPS) by an average of 30% a year, over the last three years (using a line of best fit). In the last year, its revenue has collapsed effectively to zero.
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. Shareholders might be interested in this free visualization of analyst forecasts.
Has Ardelyx, Inc. Been A Good Investment?
Given the total loss of 61% over three years, many shareholders in Ardelyx, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We compared total CEO remuneration at Ardelyx, 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.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. So you may want to check if insiders are buying Ardelyx shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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.