Is Intercept Pharmaceuticals, Inc.'s (NASDAQ:ICPT) CEO Salary Justified?

Mark Pruzanski became the CEO of Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) in 2002. 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 - 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.

See our latest analysis for Intercept Pharmaceuticals

How Does Mark Pruzanski's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Intercept Pharmaceuticals, Inc. has a market cap of US$2.0b, and is paying total annual CEO compensation of US$4.5m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$702k. 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$4.1m.

So Mark Pruzanski receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at Intercept Pharmaceuticals has changed from year to year.

Is Intercept Pharmaceuticals, Inc. Growing?

Intercept Pharmaceuticals, Inc. has increased its earnings per share (EPS) by an average of 14% a year, over the last three years (using a line of best fit). Its revenue is up 38% over last year.

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.

Has Intercept Pharmaceuticals, Inc. Been A Good Investment?

With a three year total loss of 58%, Intercept Pharmaceuticals, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Mark Pruzanski is paid around what is normal the leaders of comparable size companies.

We think that the EPS growth is very pleasing, but we cannot say the same about the lacklustre shareholder returns (over the last three years). We'd be surprised if shareholders want to see a pay rise for the CEO, but we'd stop short of calling their pay too generous. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Intercept Pharmaceuticals (free visualization of insider trades).

Important note: Intercept 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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