Shareholders May Be More Conservative With Basilea Pharmaceutica AG's (VTX:BSLN) CEO Compensation For Now

Key Insights

• Basilea Pharmaceutica's Annual General Meeting to take place on 24th of April
• Total pay for CEO David Veitch includes CHF610.7k salary
• The total compensation is 185% higher than the average for the industry
• Basilea Pharmaceutica's EPS grew by 113% over the past three years while total shareholder loss over the past three years was 12%

In the past three years, the share price of Basilea Pharmaceutica AG (VTX:BSLN) has struggled to generate growth for its shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 24th of April. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Basilea Pharmaceutica

Comparing Basilea Pharmaceutica AG's CEO Compensation With The Industry

At the time of writing, our data shows that Basilea Pharmaceutica AG has a market capitalization of CHF501m, and reported total annual CEO compensation of CHF1.7m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CHF611k.

In comparison with other companies in the Switzerland Biotechs industry with market capitalizations ranging from CHF182m to CHF728m, the reported median CEO total compensation was CHF613k. Accordingly, our analysis reveals that Basilea Pharmaceutica AG pays David Veitch north of the industry median. Moreover, David Veitch also holds CHF54k worth of Basilea Pharmaceutica stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	CHF611k	CHF599k	35%
Other	CHF1.1m	CHF1.2m	65%
Total Compensation	CHF1.7m	CHF1.8m	100%

Talking in terms of the industry, salary represented approximately 59% of total compensation out of all the companies we analyzed, while other remuneration made up 41% of the pie. In Basilea Pharmaceutica's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Basilea Pharmaceutica AG's Growth Numbers

Basilea Pharmaceutica AG's earnings per share (EPS) grew 113% per year over the last three years. In the last year, its revenue is up 6.7%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Basilea Pharmaceutica AG Been A Good Investment?

Since shareholders would have lost about 12% over three years, some Basilea Pharmaceutica AG investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have 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 3 warning signs for Basilea Pharmaceutica (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Basilea Pharmaceutica, 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.