Shareholders May Be More Conservative With Acorda Therapeutics, Inc.'s (NASDAQ:ACOR) CEO Compensation For Now

The underwhelming share price performance of Acorda Therapeutics, Inc. (NASDAQ:ACOR) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 02 June 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Acorda Therapeutics

How Does Total Compensation For Ron Cohen Compare With Other Companies In The Industry?

At the time of writing, our data shows that Acorda Therapeutics, Inc. has a market capitalization of US$35m, and reported total annual CEO compensation of US$1.5m for the year to December 2020. We note that's a decrease of 26% compared to last year. We note that the salary of US$795.7k makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$1.1m. Accordingly, our analysis reveals that Acorda Therapeutics, Inc. pays Ron Cohen north of the industry median. Moreover, Ron Cohen also holds US$498k worth of Acorda Therapeutics stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	US$796k	US$796k	53%
Other	US$709k	US$1.2m	47%
Total Compensation	US$1.5m	US$2.0m	100%

Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. Acorda Therapeutics pays out 53% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Acorda Therapeutics, Inc.'s Growth

Over the past three years, Acorda Therapeutics, Inc. has seen its earnings per share (EPS) grow by 4.5% per year. In the last year, its revenue is down 13%.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Acorda Therapeutics, Inc. Been A Good Investment?

Few Acorda Therapeutics, Inc. shareholders would feel satisfied with the return of -98% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. 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. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Acorda Therapeutics (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Acorda Therapeutics 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. 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.
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