Should Shareholders Have Second Thoughts About A Pay Rise For Star Combo Pharma Limited's (ASX:S66) CEO This Year?

Key Insights

• Star Combo Pharma's Annual General Meeting to take place on 28th of November
• CEO Su Zhang's total compensation includes salary of AU$170.0k
• Total compensation is 58% below industry average
• Star Combo Pharma's three-year loss to shareholders was 71% while its EPS was down 29% over the past three years

Performance at Star Combo Pharma Limited (ASX:S66) has not been particularly rosy recently and shareholders will likely be holding CEO Su Zhang and the board accountable for this. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 28th of November. The data we gathered below shows that CEO compensation looks acceptable for now.

See our latest analysis for Star Combo Pharma

Comparing Star Combo Pharma Limited's CEO Compensation With The Industry

Our data indicates that Star Combo Pharma Limited has a market capitalization of AU$14m, and total annual CEO compensation was reported as AU$196k for the year to June 2023. This means that the compensation hasn't changed much from last year. In particular, the salary of AU$170.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Australia Personal Products industry with market capitalizations below AU$305m, reported a median total CEO compensation of AU$463k. This suggests that Su Zhang is paid below the industry median. Furthermore, Su Zhang directly owns AU$1.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	AU$170k	AU$172k	87%
Other	AU$26k	AU$22k	13%
Total Compensation	AU$196k	AU$194k	100%

Speaking on an industry level, nearly 35% of total compensation represents salary, while the remainder of 65% is other remuneration. Star Combo Pharma pays out 87% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Star Combo Pharma Limited's Growth Numbers

Over the last three years, Star Combo Pharma Limited has shrunk its earnings per share by 29% per year. In the last year, its revenue is up 7.7%.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Star Combo Pharma Limited Been A Good Investment?

With a total shareholder return of -71% over three years, Star Combo Pharma Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 3 warning signs for Star Combo Pharma that investors should look into moving forward.

Switching gears from Star Combo Pharma, 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.

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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.