Shareholders May Not Be So Generous With Innovent Biologics, Inc.'s (HKG:1801) CEO Compensation And Here's Why

Key Insights

• Innovent Biologics to hold its Annual General Meeting on 21st of June
• CEO Michael Yu's total compensation includes salary of CN¥2.90m
• The overall pay is 934% above the industry average
• Innovent Biologics' EPS grew by 5.3% over the past three years while total shareholder loss over the past three years was 56%

Shareholders of Innovent Biologics, Inc. (HKG:1801) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 21st of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Innovent Biologics

Comparing Innovent Biologics, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Innovent Biologics, Inc. has a market capitalization of HK$62b, and reported total annual CEO compensation of CN¥36m for the year to December 2023. That's a notable increase of 11% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥2.9m.

On examining similar-sized companies in the Hong Kong Biotechs industry with market capitalizations between HK$31b and HK$94b, we discovered that the median CEO total compensation of that group was CN¥3.5m. This suggests that Michael Yu is paid more than the median for the industry. What's more, Michael Yu holds HK$4.2b 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	CN¥2.9m	CN¥2.9m	8%
Other	CN¥34m	CN¥30m	92%
Total Compensation	CN¥36m	CN¥33m	100%

On an industry level, roughly 45% of total compensation represents salary and 55% is other remuneration. Innovent Biologics pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Innovent Biologics, Inc.'s Growth

Over the past three years, Innovent Biologics, Inc. has seen its earnings per share (EPS) grow by 5.3% per year. In the last year, its revenue is up 36%.

It's hard to interpret the strong revenue growth as anything other than a positive. And in that context, the modest EPS improvement certainly isn't shabby. We'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. 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 Innovent Biologics, Inc. Been A Good Investment?

Few Innovent Biologics, Inc. shareholders would feel satisfied with the return of -56% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Innovent Biologics that you should be aware of before investing.

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.

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

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