Here's Why It's Unlikely That Patrys Limited's (ASX:PAB) CEO Will See A Pay Rise This Year

Key Insights

• Patrys will host its Annual General Meeting on 15th of November
• CEO James Campbell's total compensation includes salary of AU$358.0k
• Total compensation is similar to the industry average
• Patrys' EPS declined by 11% over the past three years while total shareholder loss over the past three years was 55%

Shareholders will probably not be too impressed with the underwhelming results at Patrys Limited (ASX:PAB) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 15th of November. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Patrys

How Does Total Compensation For James Campbell Compare With Other Companies In The Industry?

According to our data, Patrys Limited has a market capitalization of AU$19m, and paid its CEO total annual compensation worth AU$735k over 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$358k.

In comparison with other companies in the Australian Biotechs industry with market capitalizations under AU$311m, the reported median total CEO compensation was AU$594k. From this we gather that James Campbell is paid around the median for CEOs in the industry. Furthermore, James Campbell directly owns AU$170k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$358k	AU$327k	49%
Other	AU$377k	AU$391k	51%
Total Compensation	AU$735k	AU$718k	100%

On an industry level, roughly 60% of total compensation represents salary and 40% is other remuneration. Patrys sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Patrys Limited's Growth

Over the last three years, Patrys Limited has shrunk its earnings per share by 11% per year. In the last year, its revenue is down 14%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Patrys Limited Been A Good Investment?

The return of -55% over three years would not have pleased Patrys Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 5 warning signs for Patrys you should be aware of, and 3 of them can't be ignored.

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.