Does Proteostasis Therapeutics, Inc.’s (NASDAQ:PTI) CEO Salary Reflect Performance?

Meenu Chhabra became the CEO of Proteostasis Therapeutics, Inc. (NASDAQ:PTI) in 2014. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Proteostasis Therapeutics

How Does Meenu Chhabra’s Compensation Compare With Similar Sized Companies?

According to our data, Proteostasis Therapeutics, Inc. has a market capitalization of US$61m, and pays its CEO total annual compensation worth US$1.8m. (This number is for the twelve months until December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$500k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$434k.

It would therefore appear that Proteostasis Therapeutics, Inc. pays Meenu Chhabra more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. 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 a visual representation of the CEO compensation at Proteostasis Therapeutics, below.

NasdaqGM:PTI CEO Compensation, April 23rd 2019
NasdaqGM:PTI CEO Compensation, April 23rd 2019

Is Proteostasis Therapeutics, Inc. Growing?

On average over the last three years, Proteostasis Therapeutics, Inc. has grown earnings per share (EPS) by 109% each year (using a line of best fit). It saw its revenue drop -47% over the last year.

This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. Shareholders might be interested in this free visualization of analyst forecasts.

Has Proteostasis Therapeutics, Inc. Been A Good Investment?

Given the total loss of 87% over three years, many shareholders in Proteostasis Therapeutics, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared the total CEO remuneration paid by Proteostasis Therapeutics, Inc., 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.

Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. Shareholders may want to check for free if Proteostasis Therapeutics insiders are buying or selling shares.

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.

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 editorial-team@simplywallst.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.