What Can We Conclude About Therapeutics' (NASDAQ:PTCT) CEO Pay?

By
Simply Wall St
Published
November 13, 2020
NasdaqGS:PTCT

This article will reflect on the compensation paid to Stuart Peltz who has served as CEO of PTC Therapeutics, Inc. (NASDAQ:PTCT) since 1998. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Therapeutics

How Does Total Compensation For Stuart Peltz Compare With Other Companies In The Industry?

According to our data, PTC Therapeutics, Inc. has a market capitalization of US$4.1b, and paid its CEO total annual compensation worth US$7.8m over the year to December 2019. We note that's an increase of 93% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$702k.

On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$6.5m. This suggests that Therapeutics remunerates its CEO largely in line with the industry average. What's more, Stuart Peltz holds US$1.8m worth of shares in the company in their own name.

Component20192018Proportion (2019)
Salary US$702k US$659k 9%
Other US$7.1m US$3.4m 91%
Total CompensationUS$7.8m US$4.0m100%

On an industry level, around 24% of total compensation represents salary and 76% is other remuneration. In Therapeutics' case, non-salary compensation represents a greater slice of total remuneration, 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.

ceo-compensation
NasdaqGS:PTCT CEO Compensation November 13th 2020

PTC Therapeutics, Inc.'s Growth

Over the last three years, PTC Therapeutics, Inc. has shrunk its earnings per share by 46% per year. It achieved revenue growth of 21% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 PTC Therapeutics, Inc. Been A Good Investment?

Most shareholders would probably be pleased with PTC Therapeutics, Inc. for providing a total return of 273% over three years. 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.

In Summary...

As previously discussed, Stuart is compensated close to the median for companies of its size, and which belong to the same industry. Shareholder returns for the company have been strong for the last three years. At the same time, revenues are also moving northwards at a healthy pace. However, on a concerning note, EPS is not growing. Considering overall performance, it's fair to say Stuart is paid reasonably.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Therapeutics that investors should think about before committing capital to this stock.

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. 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.
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