Here's Why We Think Cytokinetics, Incorporated's (NASDAQ:CYTK) CEO Compensation Looks Fair for the time being

Key Insights

• Cytokinetics to hold its Annual General Meeting on 15th of May
• CEO Robert Blum's total compensation includes salary of US$790.0k
• The total compensation is similar to the average for the industry
• Cytokinetics' EPS declined by 37% over the past three years while total shareholder return over the past three years was 168%

Despite strong share price growth of 168% for Cytokinetics, Incorporated (NASDAQ:CYTK) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 15th of May. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Cytokinetics

Comparing Cytokinetics, Incorporated's CEO Compensation With The Industry

At the time of writing, our data shows that Cytokinetics, Incorporated has a market capitalization of US$6.8b, and reported total annual CEO compensation of US$8.8m for the year to December 2023. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$790k.

On comparing similar companies from the American Biotechs industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$12m. So it looks like Cytokinetics compensates Robert Blum in line with the median for the industry. Moreover, Robert Blum also holds US$22m worth of Cytokinetics stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$790k	US$742k	9%
Other	US$8.0m	US$7.8m	91%
Total Compensation	US$8.8m	US$8.5m	100%

On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. It's interesting to note that Cytokinetics allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Cytokinetics, Incorporated's Growth

Over the last three years, Cytokinetics, Incorporated has shrunk its earnings per share by 37% per year. It saw its revenue drop 92% over the last year.

Overall this is not a very positive result for shareholders. 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. 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 Cytokinetics, Incorporated Been A Good Investment?

Boasting a total shareholder return of 168% over three years, Cytokinetics, Incorporated has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for Cytokinetics you should be aware of, and 1 of them shouldn't be ignored.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.