Is Acceleron Pharma Inc.’s (NASDAQ:XLRN) CEO Paid Enough Relative To Peers?

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Habib Dable has been the CEO of Acceleron Pharma Inc. (NASDAQ:XLRN) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. 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.

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$2.0b, and total annual CEO compensation is US$4.3m. (This figure is for the year to December 2018). We note that’s an increase of 228% above last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$567k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.1m.

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.

You can see, below, how CEO compensation at Acceleron Pharma has changed over time.

NasdaqGM:XLRN CEO Compensation, June 18th 2019
NasdaqGM:XLRN CEO Compensation, June 18th 2019

Is Acceleron Pharma Inc. Growing?

Acceleron Pharma Inc. has reduced its earnings per share by an average of 20% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 4.1%.

Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Acceleron Pharma Inc. Been A Good Investment?

With a total shareholder return of 14% over three years, Acceleron Pharma Inc. shareholders would, in general, be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.

In Summary…

Habib Dable is paid around the same as most CEOs of similar size companies.

We feel that earnings per share have been a bit disappointing, but and we don’t think the total returns are amazing. We doubt shareholders are particularly happy to see that the CEO compensation increased on last year. We wouldn’t say the CEO pay is too high, but we’d venture the company should look to improve its business metrics (and share price) before paying any more. 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.