Increases to PuraPharm Corporation Limited's (HKG:1498) CEO Compensation Might Cool off for now

Key Insights

• PuraPharm will host its Annual General Meeting on 27th of May
• Salary of HK$3.70m is part of CEO Abraham Chan's total remuneration
• The overall pay is 83% above the industry average
• PuraPharm's three-year loss to shareholders was 62% while its EPS grew by 29% over the past three years

We've discovered 1 warning sign about PuraPharm. View them for free.

The underwhelming share price performance of PuraPharm Corporation Limited (HKG:1498) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 27th of May. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for PuraPharm

Comparing PuraPharm Corporation Limited's CEO Compensation With The Industry

At the time of writing, our data shows that PuraPharm Corporation Limited has a market capitalization of HK$213m, and reported total annual CEO compensation of HK$4.4m for the year to December 2024. Notably, that's a decrease of 28% over the year before. Notably, the salary which is HK$3.70m, represents most of the total compensation being paid.

On comparing similar-sized companies in the Hong Kong Pharmaceuticals industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.4m. Hence, we can conclude that Abraham Chan is remunerated higher than the industry median. Moreover, Abraham Chan also holds HK$71m worth of PuraPharm stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	HK$3.7m	HK$4.1m	83%
Other	HK$743k	HK$2.2m	17%
Total Compensation	HK$4.4m	HK$6.2m	100%

On an industry level, around 65% of total compensation represents salary and 35% is other remuneration. PuraPharm is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at PuraPharm Corporation Limited's Growth Numbers

Over the past three years, PuraPharm Corporation Limited has seen its earnings per share (EPS) grow by 29% per year. In the last year, its revenue is down 6.1%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has PuraPharm Corporation Limited Been A Good Investment?

With a total shareholder return of -62% over three years, PuraPharm Corporation Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.

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 PuraPharm that you should be aware of before investing.

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. 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.