George Tidmarsh became the CEO of La Jolla Pharmaceutical Company (NASDAQ:LJPC) in 2012. 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. 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.
How Does George Tidmarsh's Compensation Compare With Similar Sized Companies?
Our data indicates that La Jolla Pharmaceutical Company is worth US$183m, and total annual CEO compensation was reported as US$1.5m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$589k. 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$100m to US$400m, we found the median CEO total compensation was US$1.2m.
Thus we can conclude that George Tidmarsh receives more in total compensation than the median of a group of companies in the same market, and of similar size to La Jolla Pharmaceutical Company. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at La Jolla Pharmaceutical has changed from year to year.
Is La Jolla Pharmaceutical Company Growing?
Over the last three years La Jolla Pharmaceutical Company has shrunk its earnings per share by an average of 23% per year (measured with a line of best fit). It achieved revenue growth of 639% over the last year.
Investors should note that, over three years, earnings per share are down. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. It could be important to check this free visual depiction of what analysts expect for the future.
Has La Jolla Pharmaceutical Company Been A Good Investment?
Since shareholders would have lost about 68% over three years, some La Jolla Pharmaceutical Company shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
We examined the amount La Jolla Pharmaceutical Company pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. So you may want to check if insiders are buying La Jolla Pharmaceutical shares with their own money (free access).
Important note: La Jolla Pharmaceutical may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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 firstname.lastname@example.org. 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.