Shareholders May Be More Conservative With Alterity Therapeutics Limited's (ASX:ATH) CEO Compensation For Now

Key Insights

• Alterity Therapeutics will host its Annual General Meeting on 28th of November
• Total pay for CEO David Stamler includes AU$731.4k salary
• The total compensation is 184% higher than the average for the industry
• Alterity Therapeutics' three-year loss to shareholders was 88% while its EPS grew by 41% over the past three years

In the past three years, the share price of Alterity Therapeutics Limited (ASX:ATH) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 28th of November. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Alterity Therapeutics

Comparing Alterity Therapeutics Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Alterity Therapeutics Limited has a market capitalization of AU$9.8m, and reported total annual CEO compensation of AU$1.6m for the year to June 2023. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$731k.

For comparison, other companies in the Australian Biotechs industry with market capitalizations below AU$305m, reported a median total CEO compensation of AU$582k. Accordingly, our analysis reveals that Alterity Therapeutics Limited pays David Stamler north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	AU$731k	AU$658k	44%
Other	AU$919k	AU$966k	56%
Total Compensation	AU$1.6m	AU$1.6m	100%

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. In Alterity Therapeutics' case, non-salary compensation represents a greater slice of total remuneration, 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.

A Look at Alterity Therapeutics Limited's Growth Numbers

Alterity Therapeutics Limited has seen its earnings per share (EPS) increase by 41% a year over the past three years. In the last year, its revenue is down 24%.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Alterity Therapeutics Limited Been A Good Investment?

The return of -88% over three years would not have pleased Alterity Therapeutics Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 6 warning signs (and 4 which are significant) in Alterity Therapeutics we think you should know about.

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.