Arcus Biosciences, Inc.'s (NYSE:RCUS) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Arcus Biosciences' Annual General Meeting to take place on 6th of June
• CEO Terry Rosen's total compensation includes salary of US$650.0k
• The overall pay is 40% above the industry average
• Arcus Biosciences' EPS declined by 27% over the past three years while total shareholder loss over the past three years was 40%

In the past three years, the share price of Arcus Biosciences, Inc. (NYSE:RCUS) has struggled to grow and now shareholders are sitting on a loss. Per share earnings growth is also poor, despite revenues growing. Shareholders will have a chance to take their concerns to the board at the next AGM on 6th of June and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Check out our latest analysis for Arcus Biosciences

How Does Total Compensation For Terry Rosen Compare With Other Companies In The Industry?

According to our data, Arcus Biosciences, Inc. has a market capitalization of US$1.4b, and paid its CEO total annual compensation worth US$10m over the year to December 2023. We note that's an increase of 12% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$650k.

On comparing similar companies from the American Biotechs industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$7.2m. Accordingly, our analysis reveals that Arcus Biosciences, Inc. pays Terry Rosen north of the industry median. Furthermore, Terry Rosen directly owns US$4.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$650k	US$350k	6%
Other	US$9.5m	US$8.7m	94%
Total Compensation	US$10m	US$9.0m	100%

On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. Arcus Biosciences sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Arcus Biosciences, Inc.'s Growth Numbers

Over the last three years, Arcus Biosciences, Inc. has shrunk its earnings per share by 27% per year. Its revenue is up 99% over the last year.

Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Arcus Biosciences, Inc. Been A Good Investment?

With a total shareholder return of -40% over three years, Arcus Biosciences, Inc. shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Arcus Biosciences that investors should think about before committing capital to this stock.

Important note: Arcus Biosciences is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.