Does Vanda Pharmaceuticals Inc.’s (NASDAQ:VNDA) CEO Pay Reflect Performance?

In 2003 Mihael Polymeropoulos was appointed CEO of Vanda Pharmaceuticals Inc. (NASDAQ:VNDA). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

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See our latest analysis for Vanda Pharmaceuticals

How Does Mihael Polymeropoulos’s Compensation Compare With Similar Sized Companies?

Our data indicates that Vanda Pharmaceuticals Inc. is worth US$810m, and total annual CEO compensation is US$4.3m. (This is based on the year to December 2018). We note that’s an increase of 13% above last year. While we always look at total compensation first, we note that the salary component is less, at US$700k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.7m.

Thus we can conclude that Mihael Polymeropoulos receives more in total compensation than the median of a group of companies in the same market, and of similar size to Vanda Pharmaceuticals Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Vanda Pharmaceuticals, below.

NasdaqGM:VNDA CEO Compensation, May 20th 2019
NasdaqGM:VNDA CEO Compensation, May 20th 2019

Is Vanda Pharmaceuticals Inc. Growing?

On average over the last three years, Vanda Pharmaceuticals Inc. has grown earnings per share (EPS) by 108% each year (using a line of best fit). In the last year, its revenue is up 15%.

This demonstrates that the company has been improving recently. A good result. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Vanda Pharmaceuticals Inc. Been A Good Investment?

I think that the total shareholder return of 60%, over three years, would leave most Vanda Pharmaceuticals Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

We compared the total CEO remuneration paid by Vanda Pharmaceuticals Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. Whatever your view on compensation, you might want to check if insiders are buying or selling Vanda Pharmaceuticals shares (free trial).

If you want to buy a stock that is better than Vanda Pharmaceuticals, this free list of high return, low debt companies is a great place to look.

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.