January 19, 2021

INDAC

Keep Fit & Healthy

Is Proteostasis Therapeutics, Inc. (NASDAQ:PTI) Excessively Paying Its CEO?

3 min read
In 2014 Meenu Chhabra was appointed CEO of Proteostasis Therapeutics, Inc. (NASDAQ:PTI). This report will,...

In 2014 Meenu Chhabra was appointed CEO of Proteostasis Therapeutics, Inc. (NASDAQ:PTI). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Proteostasis Therapeutics

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

Our data indicates that Proteostasis Therapeutics, Inc. is worth US$69m, and total annual CEO compensation was reported as US$1.3m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$515k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$571k.

Thus we can conclude that Meenu Chhabra receives more in total compensation than the median of a group of companies in the same market, and of similar size to Proteostasis Therapeutics, 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, below, how CEO compensation at Proteostasis Therapeutics has changed over time.

NasdaqGM:PTI CEO Compensation, March 10th 2020

Is Proteostasis Therapeutics, Inc. Growing?

On average over the last three years, Proteostasis Therapeutics, Inc. has grown earnings per share (EPS) by 20% each year (using a line of best fit). Its revenue is up 12% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.

Has Proteostasis Therapeutics, Inc. Been A Good Investment?

Given the total loss of 89% over three years, many shareholders in Proteostasis Therapeutics, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We examined the amount Proteostasis Therapeutics, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. Shifting gears from CEO pay for a second, we’ve picked out 5 warning signs for Proteostasis Therapeutics that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

If you spot an error that warrants correction, please contact the editor at [email protected] 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.

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. Thank you for reading.

Source Article

Leave a Reply

Your email address will not be published. Required fields are marked *