Increases to Clinuvel Pharmaceuticals Limited's (ASX:CUV) CEO Compensation Might Cool off for now

In the past three years, the share price of Clinuvel Pharmaceuticals Limited (ASX:CUV) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 25 October 2022. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out the opportunities and risks within the AU Biotechs industry.

How Does Total Compensation For Philippe Wolgen Compare With Other Companies In The Industry?

Our data indicates that Clinuvel Pharmaceuticals Limited has a market capitalization of AU$892m, and total annual CEO compensation was reported as AU$7.1m for the year to June 2022. Notably, that's an increase of 43% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$1.5m.

In comparison with other companies in the industry with market capitalizations ranging from AU$319m to AU$1.3b, the reported median CEO total compensation was AU$1.9m. Hence, we can conclude that Philippe Wolgen is remunerated higher than the industry median. What's more, Philippe Wolgen holds AU$56m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	AU$1.5m	AU$1.5m	21%
Other	AU$5.6m	AU$3.4m	79%
Total Compensation	AU$7.1m	AU$5.0m	100%

Speaking on an industry level, nearly 49% of total compensation represents salary, while the remainder of 51% is other remuneration. It's interesting to note that Clinuvel Pharmaceuticals 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.

Clinuvel Pharmaceuticals Limited's Growth

Clinuvel Pharmaceuticals Limited's earnings per share (EPS) grew 3.9% per year over the last three years. It achieved revenue growth of 37% over the last year.

It's great to see that revenue growth is strong. With that in mind, the modestly improving EPS seems positive. So while we'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! 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 Clinuvel Pharmaceuticals Limited Been A Good Investment?

With a total shareholder return of -44% over three years, Clinuvel Pharmaceuticals Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Clinuvel Pharmaceuticals that investors should look into moving forward.

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.

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

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.