Key Insights

• Arrowhead Pharmaceuticals to hold its Annual General Meeting on 14th of March
• Salary of US$902.5k is part of CEO Chris Anzalone's total remuneration
• The total compensation is 51% higher than the average for the industry
• Arrowhead Pharmaceuticals' EPS declined by 24% over the past three years while total shareholder loss over the past three years was 54%

Shareholders will probably not be too impressed with the underwhelming results at Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 14th of March. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Comparing Arrowhead Pharmaceuticals, Inc.'s CEO Compensation With The Industry

According to our data, Arrowhead Pharmaceuticals, Inc. has a market capitalization of US$4.1b, and paid its CEO total annual compensation worth US$9.9m over the year to September 2023. That's a notable decrease of 18% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$903k.

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$6.6m. Hence, we can conclude that Chris Anzalone is remunerated higher than the industry median. Moreover, Chris Anzalone also holds US$123m worth of Arrowhead Pharmaceuticals stock directly under their own name, which reveals to us that they have a significant personal stake 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. Arrowhead Pharmaceuticals pays a modest slice of remuneration through salary, as compared to the broader 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 Arrowhead Pharmaceuticals, Inc.'s Growth Numbers

Over the last three years, Arrowhead Pharmaceuticals, Inc. has shrunk its earnings per share by 24% per year. Its revenue is down 35% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Arrowhead Pharmaceuticals, Inc. Been A Good Investment?

Few Arrowhead Pharmaceuticals, Inc. shareholders would feel satisfied with the return of -54% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Arrowhead Pharmaceuticals that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.