We Discuss Why NexgenRx Inc.'s (CVE:NXG) CEO Will Find It Hard To Get A Pay Rise From Shareholders This Year

Key Insights

• NexgenRx's Annual General Meeting to take place on 16th of May
• Total pay for CEO Ron Loucks includes CA$235.0k salary
• The overall pay is 61% below the industry average
• NexgenRx's three-year loss to shareholders was 41% while its EPS was down 61% over the past three years

Performance at NexgenRx Inc. (CVE:NXG) has not been particularly rosy recently and shareholders will likely be holding CEO Ron Loucks and the board accountable for this. The next AGM coming up on 16th of May will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. The data we gathered below shows that CEO compensation looks acceptable for now.

Check out our latest analysis for NexgenRx

Comparing NexgenRx Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that NexgenRx Inc. has a market capitalization of CA$16m, and reported total annual CEO compensation of CA$313k for the year to December 2023. We note that's an increase of 9.3% above last year. In particular, the salary of CA$235.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Canadian Insurance industry with market capitalizations below CA$274m, we found that the median total CEO compensation was CA$808k. In other words, NexgenRx pays its CEO lower than the industry median. Furthermore, Ron Loucks directly owns CA$1.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CA$235k	CA$235k	75%
Other	CA$78k	CA$52k	25%
Total Compensation	CA$313k	CA$287k	100%

On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. NexgenRx pays out 75% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at NexgenRx Inc.'s Growth Numbers

Over the last three years, NexgenRx Inc. has shrunk its earnings per share by 61% per year. Its revenue is up 8.3% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet 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 NexgenRx Inc. Been A Good Investment?

The return of -41% over three years would not have pleased NexgenRx Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too 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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for NexgenRx (1 doesn't sit too well with us!) 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.

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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.