This Is The Reason Why We Think Clinuvel Pharmaceuticals Limited's (ASX:CUV) CEO Might Be Underpaid

The solid performance at Clinuvel Pharmaceuticals Limited (ASX:CUV) has been impressive and shareholders will probably be pleased to know that CEO Philippe Wolgen has delivered. This would be kept in mind at the upcoming AGM on 10 November 2021 which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

Check out our latest analysis for Clinuvel Pharmaceuticals

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$2.0b, and total annual CEO compensation was reported as AU$2.7m for the year to June 2021. Notably, that's a decrease of 21% over the year before. Notably, the salary which is AU$1.53m, represents a considerable chunk of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between AU$1.3b and AU$4.3b had a median total CEO compensation of AU$4.6m. In other words, Clinuvel Pharmaceuticals pays its CEO lower than the industry median. What's more, Philippe Wolgen holds AU$126m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	AU$1.5m	AU$1.6m	57%
Other	AU$1.1m	AU$1.8m	43%
Total Compensation	AU$2.7m	AU$3.4m	100%

On an industry level, around 55% of total compensation represents salary and 45% is other remuneration. There isn't a significant difference between Clinuvel Pharmaceuticals and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Clinuvel Pharmaceuticals Limited's Growth

Over the past three years, Clinuvel Pharmaceuticals Limited has seen its earnings per share (EPS) grow by 22% per year. In the last year, its revenue is up 47%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Clinuvel Pharmaceuticals Limited Been A Good Investment?

Boasting a total shareholder return of 88% over three years, Clinuvel Pharmaceuticals Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Clinuvel Pharmaceuticals (1 can't be ignored!) that you should be aware of before investing here.

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.

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.

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