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John Higgins has been the CEO of Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) since 2007. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does John Higgins’s Compensation Compare With Similar Sized Companies?
Our data indicates that Ligand Pharmaceuticals Incorporated is worth US$2.2b, and total annual CEO compensation is US$6.3m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$627k. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$3.9m.
As you can see, John Higgins is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Ligand Pharmaceuticals Incorporated is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Ligand Pharmaceuticals has changed over time.
Is Ligand Pharmaceuticals Incorporated Growing?
On average over the last three years, Ligand Pharmaceuticals Incorporated has grown earnings per share (EPS) by 64% each year (using a line of best fit). In the last year, its revenue is up 42%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly.
Has Ligand Pharmaceuticals Incorporated Been A Good Investment?
Given the total loss of 17% over three years, many shareholders in Ligand Pharmaceuticals Incorporated are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by Ligand Pharmaceuticals Incorporated, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Ligand Pharmaceuticals shares (free trial).
Important note: Ligand Pharmaceuticals may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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 email@example.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.