Advertisement

How Does Mirati Therapeutics' (NASDAQ:MRTX) CEO Salary Compare to Peers?

Charles Baum became the CEO of Mirati Therapeutics, Inc. (NASDAQ:MRTX) in 2012, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Mirati Therapeutics pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Mirati Therapeutics

How Does Total Compensation For Charles Baum Compare With Other Companies In The Industry?

Our data indicates that Mirati Therapeutics, Inc. has a market capitalization of US$5.3b, and total annual CEO compensation was reported as US$8.5m for the year to December 2019. Notably, that's an increase of 74% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$597k.

On examining similar-sized companies in the industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$6.6m. So it looks like Mirati Therapeutics compensates Charles Baum in line with the median for the industry. Furthermore, Charles Baum directly owns US$7.9m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$597k

US$580k

7%

Other

US$7.9m

US$4.3m

93%

Total Compensation

US$8.5m

US$4.9m

100%

On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. It's interesting to note that Mirati Therapeutics allocates a smaller portion of compensation to salary in comparison 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.

ceo-compensation
ceo-compensation

A Look at Mirati Therapeutics, Inc.'s Growth Numbers

Mirati Therapeutics, Inc. has reduced its earnings per share by 24% a year over the last three years. Its revenue is down 50% over the previous year.

Few shareholders would be pleased to read that earnings have declined. This is compounded by the fact revenue is actually down on last 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 Mirati Therapeutics, Inc. Been A Good Investment?

We think that the total shareholder return of 2,571%, over three years, would leave most Mirati Therapeutics, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

As we touched on above, Mirati Therapeutics, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This isn't great when you look at it against the backdrop of earnings growth, which has been negative for the past three years. On the other hand, shareholder returns are showing positive trends over the same time frame. We're not saying CEO compensation is too generous, but shareholders might think performance needs to be improved before paying any more.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 4 warning signs for Mirati Therapeutics that investors should look into moving forward.

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

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.

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