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Should You Worry About Acceleron Pharma Inc.'s (NASDAQ:XLRN) CEO Pay Cheque?

Simply Wall St

In 2016 Habib Dable was appointed CEO of Acceleron Pharma Inc. (NASDAQ:XLRN). 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 method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Acceleron Pharma

How Does Habib Dable's Compensation Compare With Similar Sized Companies?

Our data indicates that Acceleron Pharma Inc. is worth US$2.5b, and total annual CEO compensation is US$4.3m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$567k. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO total compensation was US$5.1m.

That means Habib Dable receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at Acceleron Pharma has changed from year to year.

NasdaqGM:XLRN CEO Compensation, August 20th 2019

Is Acceleron Pharma Inc. Growing?

On average over the last three years, Acceleron Pharma Inc. has shrunk earnings per share by 14% each year (measured with a line of best fit). Its revenue is up 175% over last year.

The reduction in earnings per share, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. Shareholders might be interested in this free visualization of analyst forecasts.

Has Acceleron Pharma Inc. Been A Good Investment?

I think that the total shareholder return of 50%, over three years, would leave most Acceleron Pharma Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Remuneration for Habib Dable is close enough to the median pay for a CEO of a similar sized company .

The company isn't showing particularly great growth, but shareholder returns have been pleasing. So considering most shareholders would be happy, we'd say the CEO pay is appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Acceleron Pharma shares (free trial).

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.