Shareholders Will Probably Hold Off On Increasing ACADIA Pharmaceuticals Inc.'s (NASDAQ:ACAD) CEO Compensation For The Time Being

Key Insights

• ACADIA Pharmaceuticals to hold its Annual General Meeting on 29th of May
• CEO Steve Davis' total compensation includes salary of US$856.6k
• Total compensation is similar to the industry average
• ACADIA Pharmaceuticals' three-year loss to shareholders was 27% while its EPS grew by 40% over the past three years

Shareholders of ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 29th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for ACADIA Pharmaceuticals

Comparing ACADIA Pharmaceuticals Inc.'s CEO Compensation With The Industry

Our data indicates that ACADIA Pharmaceuticals Inc. has a market capitalization of US$2.5b, and total annual CEO compensation was reported as US$7.6m for the year to December 2023. We note that's a decrease of 46% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$857k.

On examining similar-sized companies in the American Biotechs industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$8.4m. So it looks like ACADIA Pharmaceuticals compensates Steve Davis in line with the median for the industry. Furthermore, Steve Davis directly owns US$2.5m worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	US$857k	US$822k	11%
Other	US$6.7m	US$13m	89%
Total Compensation	US$7.6m	US$14m	100%

On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. It's interesting to note that ACADIA Pharmaceuticals allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ACADIA Pharmaceuticals Inc.'s Growth

Over the past three years, ACADIA Pharmaceuticals Inc. has seen its earnings per share (EPS) grow by 40% per year. It achieved revenue growth of 56% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has ACADIA Pharmaceuticals Inc. Been A Good Investment?

Given the total shareholder loss of 27% over three years, many shareholders in ACADIA Pharmaceuticals Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

So you may want to check if insiders are buying ACADIA Pharmaceuticals shares with their own money (free access).

Important note: ACADIA Pharmaceuticals is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.