We Think Crescita Therapeutics Inc.'s (TSE:CTX) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Crescita Therapeutics to hold its Annual General Meeting on 5th of June
• Salary of CA$375.0k is part of CEO Serge Verreault's total remuneration
• The total compensation is similar to the average for the industry
• Crescita Therapeutics' three-year loss to shareholders was 44% while its EPS was down 32% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Crescita Therapeutics Inc. (TSE:CTX) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 5th of June. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Crescita Therapeutics

How Does Total Compensation For Serge Verreault Compare With Other Companies In The Industry?

According to our data, Crescita Therapeutics Inc. has a market capitalization of CA$8.2m, and paid its CEO total annual compensation worth CA$462k over the year to December 2023. We note that's a decrease of 34% compared to last year. Notably, the salary which is CA$375.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the Canadian Pharmaceuticals industry with market capitalizations below CA$274m, we found that the median total CEO compensation was CA$501k. From this we gather that Serge Verreault is paid around the median for CEOs in the industry. Moreover, Serge Verreault also holds CA$312k worth of Crescita Therapeutics stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	CA$375k	CA$375k	81%
Other	CA$87k	CA$329k	19%
Total Compensation	CA$462k	CA$704k	100%

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. Crescita Therapeutics pays out 81% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Crescita Therapeutics Inc.'s Growth

Over the last three years, Crescita Therapeutics Inc. has shrunk its earnings per share by 32% per year. In the last year, its revenue is down 23%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Crescita Therapeutics Inc. Been A Good Investment?

Few Crescita Therapeutics Inc. shareholders would feel satisfied with the return of -44% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Crescita Therapeutics that investors should be aware of in a dynamic business environment.

Switching gears from Crescita Therapeutics, 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.