Should Shareholders Reconsider Akebia Therapeutics, Inc.'s (NASDAQ:AKBA) CEO Compensation Package?

The results at Akebia Therapeutics, Inc. (NASDAQ:AKBA) have been quite disappointing recently and CEO John Butler bears some responsibility for this. At the upcoming AGM on 02 June 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Akebia Therapeutics

Comparing Akebia Therapeutics, Inc.'s CEO Compensation With the industry

According to our data, Akebia Therapeutics, Inc. has a market capitalization of US$527m, and paid its CEO total annual compensation worth US$5.9m over the year to December 2020. That's a notable increase of 37% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$696k.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$2.5m. Hence, we can conclude that John Butler is remunerated higher than the industry median. What's more, John Butler holds US$3.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	US$696k	US$648k	12%
Other	US$5.2m	US$3.7m	88%
Total Compensation	US$5.9m	US$4.3m	100%

On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Akebia Therapeutics sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Akebia Therapeutics, Inc.'s Growth Numbers

Akebia Therapeutics, Inc. has reduced its earnings per share by 24% a year over the last three years. It saw its revenue drop 26% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Akebia Therapeutics, Inc. Been A Good Investment?

Few Akebia Therapeutics, Inc. shareholders would feel satisfied with the return of -67% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Akebia Therapeutics that you should be aware of before investing.

Important note: Akebia 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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