What has VBLT performance been like?Profitability of a company is a strong indication of VBLT’s ability to generate returns on shareholders’ funds through corporate activities. In this exercise, I will use profits as a proxy for Harats’s performance. In the past year, VBLT released negative earnings of -$18M , which is a further decline from prior year’s loss of -$17M. Additionally, on average, VBLT has been loss-making in the past, with a 5-year average EPS of -$3.78. During times of negative earnings, the company may be incurring a period of reinvestment and growth, or it can be a sign of some headwind. Regardless, CEO compensation should mirror the current state of the business. In the most recent financial report, Harats’s total remuneration declined by more than half of the prior year’s level, to $1,983,000. In addition to this, Harats’s pay is also made up of non-cash elements, which means that fluxes in VBLT’s share price can move the real level of what the CEO actually receives.
Is VBLT overpaying the CEO?
Despite the fact that one size does not fit all, since compensation should be tailored to the specific company and market, we can determine a high-level thresold to see if VBLT deviates substantially from its peers. This outcome can help shareholders ask the right question about Harats’s incentive alignment. Generally, a US small-cap is worth around $1B, produces earnings of $96M, and remunerates its CEO circa $2.7M annually. Typically I would look at market cap and earnings as a proxy for performance, however, VBLT’s negative earnings lower the usefulness of my formula. Analyzing the range of remuneration for small-cap executives, it seems like