Steve Davis became the CEO of ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) in 2015. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Steve Davis’s Compensation Compare With Similar Sized Companies?
According to our data, ACADIA Pharmaceuticals Inc. has a market capitalization of US$6.3b, and paid its CEO total annual compensation worth US$6.5m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$720k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.6m.
So Steve Davis is paid around the average of the companies we looked at. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see a visual representation of the CEO compensation at ACADIA Pharmaceuticals, below.
Is ACADIA Pharmaceuticals Inc. Growing?
On average over the last three years, ACADIA Pharmaceuticals Inc. has grown earnings per share (EPS) by 9.5% each year (using a line of best fit). Its revenue is up 45% over last year.
I like the look of the strong year-on-year improvement in revenue. With that in mind, the modestly improving EPS seems positive. I’d stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. You might want to check this free visual report on analyst forecasts for future earnings.
Has ACADIA Pharmaceuticals Inc. Been A Good Investment?
ACADIA Pharmaceuticals Inc. has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.
Remuneration for Steve Davis is close enough to the median pay for a CEO of a similar sized company .
The company isn’t showing particularly great growth, and shareholder turns haven’t been particularly inspiring in the last few years. While there is room for improvement, we haven’t seen evidence to suggest the pay is too generous. So you may want to check if insiders are buying ACADIA Pharmaceuticals shares with their own money (free access).
Important note: ACADIA 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.
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