Shareholders May Be Wary Of Increasing Arrowhead Pharmaceuticals, Inc.'s (NASDAQ:ARWR) CEO Compensation Package

Key Insights

• Arrowhead Pharmaceuticals' Annual General Meeting to take place on 14th of March
• Salary of US$902.5k is part of CEO Chris Anzalone's total remuneration
• The total compensation is 51% higher than the average for the industry
• Over the past three years, Arrowhead Pharmaceuticals' EPS fell by 24% and over the past three years, the total loss to shareholders 54%

Shareholders will probably not be too impressed with the underwhelming results at Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 14th of March. 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.

View our latest analysis for Arrowhead Pharmaceuticals

How Does Total Compensation For Chris Anzalone Compare With Other Companies In The Industry?

Our data indicates that Arrowhead Pharmaceuticals, Inc. has a market capitalization of US$4.1b, and total annual CEO compensation was reported as US$9.9m for the year to September 2023. That's a notable decrease of 18% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$903k.

On examining similar-sized companies in the American Biotechs industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$6.6m. Hence, we can conclude that Chris Anzalone is remunerated higher than the industry median. Furthermore, Chris Anzalone directly owns US$123m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$903k	US$863k	9%
Other	US$9.0m	US$11m	91%
Total Compensation	US$9.9m	US$12m	100%

On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. In Arrowhead Pharmaceuticals' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Arrowhead Pharmaceuticals, Inc.'s Growth

Arrowhead Pharmaceuticals, Inc. has reduced its earnings per share by 24% a year over the last three years. In the last year, its revenue is down 35%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Arrowhead Pharmaceuticals, Inc. Been A Good Investment?

With a total shareholder return of -54% over three years, Arrowhead Pharmaceuticals, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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. We did our research and spotted 2 warning signs for Arrowhead Pharmaceuticals that investors should look into moving forward.

Important note: Arrowhead Pharmaceuticals 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.