Should You Worry About ArQule, Inc.’s (NASDAQ:ARQL) CEO Pay?

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Paolo Pucci has been the CEO of ArQule, Inc. (NASDAQ:ARQL) since 2008. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for ArQule

How Does Paolo Pucci’s Compensation Compare With Similar Sized Companies?

According to our data, ArQule, Inc. has a market capitalization of US$712m, and pays its CEO total annual compensation worth US$1.7m. (This number is for the twelve months until December 2018). We note that’s an increase of 25% above last year. We think total compensation is more important but we note that the CEO salary is lower, at US$506k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.7m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see, below, how CEO compensation at ArQule has changed over time.

NasdaqGM:ARQL CEO Compensation, June 10th 2019
NasdaqGM:ARQL CEO Compensation, June 10th 2019

Is ArQule, Inc. Growing?

Over the last three years ArQule, Inc. has grown its earnings per share (EPS) by an average of 12% per year (using a line of best fit). In the last year, its revenue is up 455%.

This demonstrates that the company has been improving recently. A good result. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Shareholders might be interested in this free visualization of analyst forecasts.

Has ArQule, Inc. Been A Good Investment?

Boasting a total shareholder return of 266% over three years, ArQule, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

ArQule, Inc. is currently paying its CEO below what is normal for companies of its size. Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that Paolo Pucci deserves a raise!

It’s not often we see shareholders do so well, and yet the CEO is paid modestly. It would be even more positive if company insiders are buying shares. So you may want to check if insiders are buying ArQule 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.

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 editorial-team@simplywallst.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.

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