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John Butler became the CEO of Akebia Therapeutics, Inc. (NASDAQ:AKBA) in 2013. 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. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does John Butler’s Compensation Compare With Similar Sized Companies?
Our data indicates that Akebia Therapeutics, Inc. is worth US$504m, and total annual CEO compensation is US$3.5m. (This number is for the twelve months until December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$595k. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO total compensation was US$1.7m.
It would therefore appear that Akebia Therapeutics, Inc. pays John Butler more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Akebia Therapeutics has changed over time.
Is Akebia Therapeutics, Inc. Growing?
Over the last three years Akebia Therapeutics, Inc. has grown its earnings per share (EPS) by an average of 21% per year (using a line of best fit). In the last year, its revenue is up 14%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business.
Has Akebia Therapeutics, Inc. Been A Good Investment?
With a three year total loss of 50%, Akebia Therapeutics, Inc. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
We examined the amount Akebia Therapeutics, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Akebia Therapeutics (free visualization of insider trades).
Important note: Akebia Therapeutics 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.