Most Shareholders Will Probably Agree With Crinetics Pharmaceuticals, Inc.'s (NASDAQ:CRNX) CEO Compensation

Key Insights

• Crinetics Pharmaceuticals to hold its Annual General Meeting on 7th of June
• Salary of US$614.0k is part of CEO R. Struthers's total remuneration
• The overall pay is 31% below the industry average
• Crinetics Pharmaceuticals' EPS declined by 14% over the past three years while total shareholder return over the past three years was 162%

Shareholders may be wondering what CEO R. Struthers plans to do to improve the less than great performance at Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX) recently. At the next AGM coming up on 7th of June, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. In our opinion, CEO compensation does not look excessive and we discuss why.

View our latest analysis for Crinetics Pharmaceuticals

Comparing Crinetics Pharmaceuticals, Inc.'s CEO Compensation With The Industry

According to our data, Crinetics Pharmaceuticals, Inc. has a market capitalization of US$3.6b, and paid its CEO total annual compensation worth US$5.7m over the year to December 2023. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$614k.

On comparing similar companies from the American Biotechs industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$8.4m. In other words, Crinetics Pharmaceuticals pays its CEO lower than the industry median. Furthermore, R. Struthers directly owns US$45m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$614k	US$590k	11%
Other	US$5.1m	US$5.0m	89%
Total Compensation	US$5.7m	US$5.6m	100%

On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. Crinetics Pharmaceuticals sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Crinetics Pharmaceuticals, Inc.'s Growth

Crinetics Pharmaceuticals, Inc. has reduced its earnings per share by 14% a year over the last three years. In the last year, its revenue is down 54%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Crinetics Pharmaceuticals, Inc. Been A Good Investment?

We think that the total shareholder return of 162%, over three years, would leave most Crinetics Pharmaceuticals, Inc. shareholders smiling. 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.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Crinetics Pharmaceuticals that investors should be aware of in a dynamic business environment.

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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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.