Mike Raab has been the CEO of Ardelyx, Inc. (NASDAQ:ARDX) since 2009. 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. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Mike Raab’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Ardelyx, Inc. has a market cap of US$207m, and is paying total annual CEO compensation of US$4.8m. (This is based on the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at US$555k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$100m to US$400m. The median total CEO compensation was US$1.0m.
It would therefore appear that Ardelyx, Inc. pays Mike Raab 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Ardelyx has changed from year to year.
Is Ardelyx, Inc. Growing?
Ardelyx, Inc. has increased its earnings per share (EPS) by an average of 21% a year, over the last three years (using a line of best fit). It saw its revenue drop -94% over the last year.
This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. You might want to check this free visual report on analyst forecasts for future earnings.
Has Ardelyx, Inc. Been A Good Investment?
Since shareholders would have lost about 55% over three years, some Ardelyx, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by Ardelyx, Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. So you may want to check if insiders are buying Ardelyx shares with their own money (free access).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.