We Discuss Why Enanta Pharmaceuticals, Inc.'s (NASDAQ:ENTA) CEO Compensation May Be Closely Reviewed

Key Insights

• Enanta Pharmaceuticals will host its Annual General Meeting on 2nd of March
• Salary of US$725.1k is part of CEO Jay Luly's total remuneration
• The overall pay is 41% above the industry average
• Over the past three years, Enanta Pharmaceuticals' EPS fell by 72% and over the past three years, the total loss to shareholders 3.6%

Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) has not performed well recently and CEO Jay Luly will probably need to up their game. At the upcoming AGM on 2nd of March, shareholders can hear from the board including their plans for turning around performance. 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 Enanta Pharmaceuticals

How Does Total Compensation For Jay Luly Compare With Other Companies In The Industry?

According to our data, Enanta Pharmaceuticals, Inc. has a market capitalization of US$1.0b, and paid its CEO total annual compensation worth US$7.3m over the year to September 2022. Notably, that's an increase of 37% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$725k.

In comparison with other companies in the American Biotechs industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$5.2m. Hence, we can conclude that Jay Luly is remunerated higher than the industry median. What's more, Jay Luly holds US$36m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	US$725k	US$693k	10%
Other	US$6.5m	US$4.6m	90%
Total Compensation	US$7.3m	US$5.3m	100%

Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. It's interesting to note that Enanta Pharmaceuticals allocates a smaller portion of compensation to salary 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.

Enanta Pharmaceuticals, Inc.'s Growth

Over the last three years, Enanta Pharmaceuticals, Inc. has shrunk its earnings per share by 72% per year. In the last year, its revenue is down 12%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-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 Enanta Pharmaceuticals, Inc. Been A Good Investment?

Given the total shareholder loss of 3.6% over three years, many shareholders in Enanta Pharmaceuticals, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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.

So you may want to check if insiders are buying Enanta Pharmaceuticals shares with their own money (free access).

Switching gears from Enanta Pharmaceuticals, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.