Is Dicerna Pharmaceuticals, Inc.’s (NASDAQ:DRNA) CEO Being Overpaid?

Douglas Fambrough became the CEO of Dicerna Pharmaceuticals, Inc. (NASDAQ:DRNA) in 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. 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.

Check out our latest analysis for Dicerna Pharmaceuticals

How Does Douglas Fambrough’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Dicerna Pharmaceuticals, Inc. has a market cap of US$1.3b, and reported total annual CEO compensation of US$2.5m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$507k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. 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$3.9m.

Most shareholders would consider it a positive that Douglas Fambrough takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see, below, how CEO compensation at Dicerna Pharmaceuticals has changed over time.

NasdaqGS:DRNA CEO Compensation, January 26th 2020
NasdaqGS:DRNA CEO Compensation, January 26th 2020

Is Dicerna Pharmaceuticals, Inc. Growing?

On average over the last three years, Dicerna Pharmaceuticals, Inc. has grown earnings per share (EPS) by 26% each year (using a line of best fit). In the last year, its revenue is up 224%.

This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.

Has Dicerna Pharmaceuticals, Inc. Been A Good Investment?

I think that the total shareholder return of 613%, over three years, would leave most Dicerna Pharmaceuticals, Inc. shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

It looks like Dicerna Pharmaceuticals, Inc. pays its CEO less than similar sized companies.

Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Douglas Fambrough deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. The cherry on top would be if company insiders are buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Dicerna Pharmaceuticals.

Important note: Dicerna 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.

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.

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