Should Shareholders Reconsider Pliant Therapeutics, Inc.'s (NASDAQ:PLRX) CEO Compensation Package?

Key Insights

• Pliant Therapeutics' Annual General Meeting to take place on 13th of June
• CEO Bernard Coulie's total compensation includes salary of US$610.3k
• The overall pay is 158% above the industry average
• Pliant Therapeutics' three-year loss to shareholders was 63% while its EPS was down 4.0% over the past three years

The results at Pliant Therapeutics, Inc. (NASDAQ:PLRX) have been quite disappointing recently and CEO Bernard Coulie bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 13th of June. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Pliant Therapeutics

Comparing Pliant Therapeutics, Inc.'s CEO Compensation With The Industry

According to our data, Pliant Therapeutics, Inc. has a market capitalization of US$730m, and paid its CEO total annual compensation worth US$11m over the year to December 2023. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$610k.

For comparison, other companies in the American Pharmaceuticals industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$4.3m. This suggests that Bernard Coulie is paid more than the median for the industry. Moreover, Bernard Coulie also holds US$7.2m worth of Pliant Therapeutics 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$610k	US$587k	5%
Other	US$11m	US$10m	95%
Total Compensation	US$11m	US$11m	100%

Speaking on an industry level, nearly 29% of total compensation represents salary, while the remainder of 71% is other remuneration. It's interesting to note that Pliant Therapeutics 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.

A Look at Pliant Therapeutics, Inc.'s Growth Numbers

Pliant Therapeutics, Inc. has reduced its earnings per share by 4.0% a year over the last three years. Its revenue is down 97% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Pliant Therapeutics, Inc. Been A Good Investment?

With a total shareholder return of -63% over three years, Pliant Therapeutics, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Pliant Therapeutics (2 shouldn't be ignored!) that you should be aware of before investing here.

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.