We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Invion Limited's (ASX:IVX) CEO For Now

Key Insights

• Invion's Annual General Meeting to take place on 29th of November
• Salary of AU$399.0k is part of CEO Thian Chew's total remuneration
• The total compensation is 31% higher than the average for the industry
• Over the past three years, Invion's EPS fell by 23% and over the past three years, the total loss to shareholders 36%

The underwhelming share price performance of Invion Limited (ASX:IVX) in the past three years would have disappointed many shareholders. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 29th of November will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

View our latest analysis for Invion

Comparing Invion Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Invion Limited has a market capitalization of AU$45m, and reported total annual CEO compensation of AU$851k for the year to June 2023. We note that's a decrease of 47% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$399k.

On comparing similar-sized companies in the Australian Pharmaceuticals industry with market capitalizations below AU$305m, we found that the median total CEO compensation was AU$648k. This suggests that Thian Chew is paid more than the median for the industry. Moreover, Thian Chew also holds AU$3.8m worth of Invion stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$399k	AU$399k	47%
Other	AU$452k	AU$1.2m	53%
Total Compensation	AU$851k	AU$1.6m	100%

On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. Invion sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Invion Limited's Growth Numbers

Over the last three years, Invion Limited has shrunk its earnings per share by 23% per year. Its revenue is up 25% over the last year.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Invion Limited Been A Good Investment?

With a total shareholder return of -36% over three years, Invion Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 5 warning signs for Invion (of which 3 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Invion is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.