The results at Newron Pharmaceuticals S.p.A. (VTX:NWRN) have been quite disappointing recently and CEO Stefan Weber bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 13 April 2021. 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.
Comparing Newron Pharmaceuticals S.p.A.'s CEO Compensation With the industry
According to our data, Newron Pharmaceuticals S.p.A. has a market capitalization of CHF46m, and paid its CEO total annual compensation worth €582k over the year to December 2020. Notably, that's a decrease of 16% over the year before. We note that the salary portion, which stands at €403.0k constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below CHF187m, we found that the median total CEO compensation was €309k. Hence, we can conclude that Stefan Weber is remunerated higher than the industry median. Furthermore, Stefan Weber directly owns CHF50k worth of shares in the company.
Talking in terms of the industry, salary represented approximately 33% of total compensation out of all the companies we analyzed, while other remuneration made up 67% of the pie. Newron Pharmaceuticals pays out 69% 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.
Newron Pharmaceuticals S.p.A.'s Growth
Newron Pharmaceuticals S.p.A. has reduced its earnings per share by 22% a year over the last three years. It saw its revenue drop 25% over the last year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Newron Pharmaceuticals S.p.A. Been A Good Investment?
Few Newron Pharmaceuticals S.p.A. shareholders would feel satisfied with the return of -72% over three years. So shareholders would probably want the company to be less generous with CEO compensation.
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a 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. That's why we did some digging and identified 1 warning sign for Newron Pharmaceuticals that investors should think about before committing capital to this stock.
Important note: Newron Pharmaceuticals is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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This article by Simply Wall St is general in nature. 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.
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