Meenu Chhabra has been the CEO of Proteostasis Therapeutics, Inc. (NASDAQ:PTI) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Proteostasis Therapeutics, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Proteostasis Therapeutics, Inc. has a market capitalization of US$71m, and reported total annual CEO compensation of US$2.0m for the year to December 2019. We note that's an increase of 54% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$540k.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$1.1m. Accordingly, our analysis reveals that Proteostasis Therapeutics, Inc. pays Meenu Chhabra north of the industry median. Furthermore, Meenu Chhabra directly owns US$110k worth of shares in the company.
Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. Proteostasis Therapeutics pays out 27% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Proteostasis Therapeutics, Inc.'s Growth Numbers
Proteostasis Therapeutics, Inc.'s earnings per share (EPS) grew 29% per year over the last three years. In the last year, its revenue has collapsed effectively to zero.
This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Proteostasis Therapeutics, Inc. Been A Good Investment?
Given the total shareholder loss of 36% over three years, many shareholders in Proteostasis Therapeutics, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we touched on above, Proteostasis Therapeutics, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, we must not forget that the EPS growth has been very strong, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think Meenu is earning a very handsome sum.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 5 warning signs for Proteostasis Therapeutics (1 is a bit concerning!) that you should be aware of before investing here.
Important note: Proteostasis Therapeutics 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.
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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