Here's Why Shareholders Should Examine Viva Biotech Holdings' (HKG:1873) CEO Compensation Package More Closely

Key Insights

• Viva Biotech Holdings to hold its Annual General Meeting on 26th of June
• CEO Chen Cheney Mao's total compensation includes salary of CN¥1.46m
• Total compensation is 72% above industry average
• Viva Biotech Holdings' EPS declined by 45% over the past three years while total shareholder loss over the past three years was 95%

The results at Viva Biotech Holdings (HKG:1873) have been quite disappointing recently and CEO Chen Cheney Mao bears some responsibility for this. At the upcoming AGM on 26th of June, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Viva Biotech Holdings

How Does Total Compensation For Chen Cheney Mao Compare With Other Companies In The Industry?

Our data indicates that Viva Biotech Holdings has a market capitalization of HK$1.2b, and total annual CEO compensation was reported as CN¥2.4m for the year to December 2023. Notably, that's a decrease of 13% over the year before. In particular, the salary of CN¥1.46m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Hong Kong Life Sciences industry with market caps ranging from HK$781m to HK$3.1b, we found that the median CEO total compensation was CN¥1.4m. Accordingly, our analysis reveals that Viva Biotech Holdings pays Chen Cheney Mao north of the industry median. Furthermore, Chen Cheney Mao directly owns HK$184m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.5m	CN¥1.5m	61%
Other	CN¥939k	CN¥1.3m	39%
Total Compensation	CN¥2.4m	CN¥2.8m	100%

On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. Our data reveals that Viva Biotech Holdings 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.

A Look at Viva Biotech Holdings' Growth Numbers

Viva Biotech Holdings has reduced its earnings per share by 45% a year over the last three years. In the last year, its revenue is down 9.4%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Viva Biotech Holdings Been A Good Investment?

Few Viva Biotech Holdings shareholders would feel satisfied with the return of -95% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Viva Biotech Holdings (1 is significant!) that you should be aware of before investing here.

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