Robert Blum became the CEO of Cytokinetics, Incorporated (NASDAQ:CYTK) in 2007. First, this article will compare CEO compensation with compensation at similar sized companies. 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 Robert Blum’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Cytokinetics, Incorporated has a market cap of US$568m, and reported total annual CEO compensation of US$3.3m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$630k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO total compensation was US$2.3m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. So it seems like there isn’t a significant difference between Cytokinetics and the broader market, in terms of salary allocation in the overall compensation package.
As you can see, Robert Blum is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Cytokinetics, Incorporated is paying too much. 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 Cytokinetics, below.
Is Cytokinetics, Incorporated Growing?
Over the last three years Cytokinetics, Incorporated has shrunk its earnings per share by an average of 40% per year (measured with a line of best fit). It saw its revenue drop 15% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has Cytokinetics, Incorporated Been A Good Investment?
Given the total loss of 24% over three years, many shareholders in Cytokinetics, Incorporated 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 Cytokinetics, Incorporated with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. Arguably worse, investors are without a positive return for the last three years. In our opinion the CEO might be paid too generously! CEO compensation is an important area to keep your eyes on, but we’ve also identified 4 warning signs for Cytokinetics (1 doesn’t sit too well with us!) that you should be aware of before investing here.
If you want to buy a stock that is better than Cytokinetics, this free list of high return, low debt companies is a great place to look.
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