J. Huff became the CEO of Reata Pharmaceuticals, Inc. (NASDAQ:RETA) in 2002. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does J. Huff’s Compensation Compare With Similar Sized Companies?
Our data indicates that Reata Pharmaceuticals, Inc. is worth US$6.9b, and total annual CEO compensation was reported as US$935k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$534k. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO total compensation of that group was US$6.4m.
Most shareholders would consider it a positive that J. Huff takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Reata Pharmaceuticals has changed from year to year.
Is Reata Pharmaceuticals, Inc. Growing?
On average over the last three years, Reata Pharmaceuticals, Inc. has shrunk earnings per share by 68% each year (measured with a line of best fit). Its revenue is down 42% over last year.
Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Reata Pharmaceuticals, Inc. Been A Good Investment?
I think that the total shareholder return of 798%, over three years, would leave most Reata Pharmaceuticals, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Reata Pharmaceuticals, Inc. is currently paying its CEO below what is normal for companies of its size.
J. Huff receives relatively low remuneration compared to similar sized companies. And while the company isn’t growing earnings per share, total returns have been pleasing. We would like to see EPS growth, but in our view it seems the CEO is remunerated reasonably. So you may want to check if insiders are buying Reata Pharmaceuticals shares with their own money (free access).
If you want to buy a stock that is better than Reata Pharmaceuticals, this free list of high return, low debt companies is a great place to look.
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