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It's Probably Less Likely That ACADIA Pharmaceuticals Inc.'s (NASDAQ:ACAD) CEO Will See A Huge Pay Rise This Year

Key Insights

  • ACADIA Pharmaceuticals' Annual General Meeting to take place on 29th of May

  • Total pay for CEO Steve Davis includes US$856.6k salary

  • The overall pay is comparable to the industry average

  • ACADIA Pharmaceuticals' three-year loss to shareholders was 27% while its EPS grew by 40% over the past three years

In the past three years, the share price of ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 29th of May could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for ACADIA Pharmaceuticals

Comparing ACADIA Pharmaceuticals Inc.'s CEO Compensation With The Industry

According to our data, ACADIA Pharmaceuticals Inc. has a market capitalization of US$2.5b, and paid its CEO total annual compensation worth US$7.6m over the year to December 2023. Notably, that's a decrease of 46% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$857k.

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On comparing similar companies from the American Biotechs industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$8.4m. So it looks like ACADIA Pharmaceuticals compensates Steve Davis in line with the median for the industry. Furthermore, Steve Davis directly owns US$2.5m worth of shares in the company.

Component

2023

2022

Proportion (2023)

Salary

US$857k

US$822k

11%

Other

US$6.7m

US$13m

89%

Total Compensation

US$7.6m

US$14m

100%

On an industry level, around 24% of total compensation represents salary and 76% is other remuneration. ACADIA Pharmaceuticals 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.

ceo-compensation
ceo-compensation

A Look at ACADIA Pharmaceuticals Inc.'s Growth Numbers

Over the past three years, ACADIA Pharmaceuticals Inc. has seen its earnings per share (EPS) grow by 40% per year. In the last year, its revenue is up 56%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has ACADIA Pharmaceuticals Inc. Been A Good Investment?

With a three year total loss of 27% for the shareholders, ACADIA Pharmaceuticals Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

Shareholders may want to check for free if ACADIA Pharmaceuticals insiders are buying or selling shares.

Important note: ACADIA Pharmaceuticals 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.