Why We Think OptiBiotix Health Plc's (LON:OPTI) CEO Compensation Is Not Excessive At All

Key Insights

• OptiBiotix Health to hold its Annual General Meeting on 8th of August
• CEO Stephen O'Hara's total compensation includes salary of UK£138.0k
• The overall pay is 47% below the industry average
• Over the past three years, OptiBiotix Health's EPS fell by 95% and over the past three years, the total loss to shareholders 49%

Shareholders may be wondering what CEO Stephen O'Hara plans to do to improve the less than great performance at OptiBiotix Health Plc (LON:OPTI) recently. At the next AGM coming up on 8th of August, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We think CEO compensation looks appropriate given the data we have put together.

See our latest analysis for OptiBiotix Health

Comparing OptiBiotix Health Plc's CEO Compensation With The Industry

At the time of writing, our data shows that OptiBiotix Health Plc has a market capitalization of UK£24m, and reported total annual CEO compensation of UK£147k for the year to December 2023. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at UK£138.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the British Biotechs industry with market capitalizations below UK£157m, we found that the median total CEO compensation was UK£277k. Accordingly, OptiBiotix Health pays its CEO under the industry median. What's more, Stephen O'Hara holds UK£2.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	UK£138k	UK£143k	94%
Other	UK£9.0k	UK£8.0k	6%
Total Compensation	UK£147k	UK£151k	100%

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. Our data reveals that OptiBiotix Health allocates salary more or less in line with the wider market. 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.

OptiBiotix Health Plc's Growth

Over the last three years, OptiBiotix Health Plc has shrunk its earnings per share by 95% per year. In the last year, its revenue is up 41%.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 OptiBiotix Health Plc Been A Good Investment?

Few OptiBiotix Health Plc shareholders would feel satisfied with the return of -49% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss is certainly disheartening. The fact that earnings growth has gone backwards could be a factor for the downward trend in the share price. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 5 warning signs for OptiBiotix Health you should be aware of, and 3 of them can't be ignored.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com