This Is Why Nova Mentis Life Science Corp.'s (CSE:NOVA) CEO Compensation Looks Appropriate

Shareholders may be wondering what CEO Will Rascan plans to do to improve the less than great performance at Nova Mentis Life Science Corp. (CSE:NOVA) recently. At the next AGM coming up on 15 December 2022, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.

Our analysis indicates that NOVA is potentially overvalued!

Comparing Nova Mentis Life Science Corp.'s CEO Compensation With The Industry

At the time of writing, our data shows that Nova Mentis Life Science Corp. has a market capitalization of CA$7.2m, and reported total annual CEO compensation of CA$150k for the year to December 2021. We note that's a small decrease of 3.2% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth CA$150k.

In comparison with other companies in the industry with market capitalizations under CA$272m, the reported median total CEO compensation was CA$304k. In other words, Nova Mentis Life Science pays its CEO lower than the industry median. What's more, Will Rascan holds CA$75k worth of shares in the company in their own name.

Component	2021	2020	Proportion (2021)
Salary	CA$150k	CA$150k	100%
Other	-	CA$5.0k	-
Total Compensation	CA$150k	CA$155k	100%

On an industry level, around 78% of total compensation represents salary and 22% is other remuneration. At the company level, Nova Mentis Life Science pays Will Rascan solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Nova Mentis Life Science Corp.'s Growth Numbers

Nova Mentis Life Science Corp. has seen its earnings per share (EPS) increase by 19% a year over the past three years. In the last year, the company lost virtually all of its revenue.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Nova Mentis Life Science Corp. Been A Good Investment?

With a total shareholder return of -72% over three years, Nova Mentis Life Science Corp. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Nova Mentis Life Science rewards its CEO solely through a salary, ignoring non-salary benefits completely. The fact that shareholders are sitting on a loss is certainly disheartening. This contrasts to the strong EPS growth recently however, and suggests that there may be other factors at play driving down the share price. A key focus for the board and management will be how to align the share price with fundamentals. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 6 warning signs for Nova Mentis Life Science (of which 5 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Nova Mentis Life Science, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.