Stock Analysis

How Does Vanda Pharmaceuticals' (NASDAQ:VNDA) CEO Pay Compare With Company Performance?

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NasdaqGM:VNDA
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This article will reflect on the compensation paid to Mihael Polymeropoulos who has served as CEO of Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) since 2003. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Vanda Pharmaceuticals.

See our latest analysis for Vanda Pharmaceuticals

How Does Total Compensation For Mihael Polymeropoulos Compare With Other Companies In The Industry?

Our data indicates that Vanda Pharmaceuticals Inc. has a market capitalization of US$675m, and total annual CEO compensation was reported as US$4.3m for the year to December 2019. That's just a smallish increase of 6.3% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$721k.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$2.5m. This suggests that Mihael Polymeropoulos is paid more than the median for the industry. Furthermore, Mihael Polymeropoulos directly owns US$14m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary US$721k US$700k 17%
Other US$3.6m US$3.3m 83%
Total CompensationUS$4.3m US$4.0m100%

Talking in terms of the industry, salary represented approximately 25% of total compensation out of all the companies we analyzed, while other remuneration made up 75% of the pie. In Vanda Pharmaceuticals' 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
NasdaqGM:VNDA CEO Compensation December 2nd 2020

A Look at Vanda Pharmaceuticals Inc.'s Growth Numbers

Vanda Pharmaceuticals Inc.'s earnings per share (EPS) grew 89% per year over the last three years. In the last year, its revenue is up 10%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Vanda Pharmaceuticals Inc. Been A Good Investment?

Since shareholders would have lost about 12% over three years, some Vanda Pharmaceuticals Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Vanda Pharmaceuticals pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, we must not forget that the EPS growth has been very strong, but it's disappointing to see negative shareholder returns over the same period. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Vanda Pharmaceuticals that investors should look into moving forward.

Switching gears from Vanda Pharmaceuticals, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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