Should Shareholders Have Second Thoughts About A Pay Rise For N4 Pharma Plc's (LON:N4P) CEO This Year?

The underwhelming performance at N4 Pharma Plc (LON:N4P) recently has probably not pleased shareholders. The next AGM coming up on 24 March 2021 will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. The data we gathered below shows that CEO compensation looks acceptable for now.

See our latest analysis for N4 Pharma

Comparing N4 Pharma Plc's CEO Compensation With the industry

Our data indicates that N4 Pharma Plc has a market capitalization of UK£16m, and total annual CEO compensation was reported as UK£72k for the year to December 2020. This means that the compensation hasn't changed much from last year. Notably, the salary of UK£72k is the entirety of the CEO compensation.

In comparison with other companies in the industry with market capitalizations under UK£144m, the reported median total CEO compensation was UK£253k. This suggests that Nigel Theobald is paid below the industry median. What's more, Nigel Theobald holds UK£1.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	UK£72k	UK£70k	100%
Other	-	-	-
Total Compensation	UK£72k	UK£70k	100%

On an industry level, around 52% of total compensation represents salary and 48% is other remuneration. On a company level, N4 Pharma prefers to reward its CEO through a salary, opting not to pay Nigel Theobald through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at N4 Pharma Plc's Growth Numbers

Over the last three years, N4 Pharma Plc has shrunk its earnings per share by 7.4% per year. It saw its revenue drop 89% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has N4 Pharma Plc Been A Good Investment?

With a total shareholder return of -52% over three years, N4 Pharma Plc shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

N4 Pharma rewards its CEO solely through a salary, ignoring non-salary benefits completely. 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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 3 which are significant) in N4 Pharma we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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