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John Higgins became the CEO of Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) in 2007. First, this article will compare CEO compensation with compensation at similar sized companies. 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. This process should give us an idea about how appropriately the CEO is paid.
How Does John Higgins's Compensation Compare With Similar Sized Companies?
Our data indicates that Ligand Pharmaceuticals Incorporated is worth US$2.1b, and total annual CEO compensation is US$6.3m. (This is based on the year to December 2018). Notably, that's an increase of 14% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$627k. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$4.2m.
Thus we can conclude that John Higgins receives more in total compensation than the median of a group of companies in the same market, and of similar size to Ligand Pharmaceuticals Incorporated. 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.
You can see a visual representation of the CEO compensation at Ligand Pharmaceuticals, below.
Is Ligand Pharmaceuticals Incorporated Growing?
On average over the last three years, Ligand Pharmaceuticals Incorporated has grown earnings per share (EPS) by 64% each year (using a line of best fit). Its revenue is up 42% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.
Has Ligand Pharmaceuticals Incorporated Been A Good Investment?
With a three year total loss of 9.1%, Ligand Pharmaceuticals Incorporated would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at Ligand Pharmaceuticals Incorporated with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. This doesn't look great when you consider CEO remuneration is up on last year. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. So you may want to check if insiders are buying Ligand Pharmaceuticals shares with their own money (free access).
Important note: Ligand Pharmaceuticals 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.