We Think Some Shareholders May Hesitate To Increase Molecular Partners AG's (VTX:MOLN) CEO Compensation

Key Insights

• Molecular Partners to hold its Annual General Meeting on 17th of April
• Salary of CHF385.0k is part of CEO Patrick Amstutz's total remuneration
• The overall pay is 223% above the industry average
• Over the past three years, Molecular Partners' EPS grew by 20% and over the past three years, the total loss to shareholders 85%

The underwhelming share price performance of Molecular Partners AG (VTX:MOLN) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 17th of April. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Molecular Partners

Comparing Molecular Partners AG's CEO Compensation With The Industry

According to our data, Molecular Partners AG has a market capitalization of CHF118m, and paid its CEO total annual compensation worth CHF1.0m over the year to December 2023. That's just a smallish increase of 4.2% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CHF385k.

On comparing similar-sized companies in the Switzerland Biotechs industry with market capitalizations below CHF183m, we found that the median total CEO compensation was CHF324k. This suggests that Patrick Amstutz is paid more than the median for the industry. Furthermore, Patrick Amstutz directly owns CHF2.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CHF385k	CHF383k	37%
Other	CHF662k	CHF622k	63%
Total Compensation	CHF1.0m	CHF1.0m	100%

On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. Molecular Partners 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.

A Look at Molecular Partners AG's Growth Numbers

Molecular Partners AG's earnings per share (EPS) grew 20% per year over the last three years. Its revenue is down 96% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. 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 Molecular Partners AG Been A Good Investment?

With a total shareholder return of -85% over three years, Molecular Partners AG shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Molecular Partners that investors should look into moving forward.

Switching gears from Molecular Partners, 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.