How Does Flexion Therapeutics' (NASDAQ:FLXN) CEO Pay Compare With Company Performance?

This article will reflect on the compensation paid to Mike Clayman who has served as CEO of Flexion Therapeutics, Inc. (NASDAQ:FLXN) since 2007. This analysis will also assess whether Flexion Therapeutics pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Flexion Therapeutics

Comparing Flexion Therapeutics, Inc.'s CEO Compensation With the industry

Our data indicates that Flexion Therapeutics, Inc. has a market capitalization of US$615m, and total annual CEO compensation was reported as US$3.8m for the year to December 2019. We note that's an increase of 17% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$621k.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$3.2m. So it looks like Flexion Therapeutics compensates Mike Clayman in line with the median for the industry. Moreover, Mike Clayman also holds US$5.5m worth of Flexion Therapeutics stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. It's interesting to note that Flexion 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.

Flexion Therapeutics, Inc.'s Growth

Over the last three years, Flexion Therapeutics, Inc. has not seen its earnings per share change much, though they have deteriorated slightly. It achieved revenue growth of 83% over the last year.

The decrease in earnings could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Flexion Therapeutics, Inc. Been A Good Investment?

Since shareholders would have lost about 43% over three years, some Flexion Therapeutics, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we noted earlier, Flexion Therapeutics pays its CEO in line with similar-sized companies belonging to the same industry. Still, the company is logging healthy revenue growth over the last year. In contrast, over the same time span, shareholder returns are negative. EPS is also not growing, undoubtedly leading to further headaches. It's tough for us to say Mike is overpaid but a mixed bag in terms of performance will surely irk shareholders and reduce chances of a raise.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Flexion Therapeutics that investors should think about before committing capital to this stock.

Switching gears from Flexion Therapeutics, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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