Shareholders May Be A Bit More Conservative With Mabpharm Limited's (HKG:2181) CEO Compensation For Now

Key Insights

• Mabpharm to hold its Annual General Meeting on 21st of June
• CEO Hao Wang's total compensation includes salary of CN¥1.07m
• Total compensation is similar to the industry average
• Over the past three years, Mabpharm's EPS grew by 7.2% and over the past three years, the total loss to shareholders 68%

Shareholders of Mabpharm Limited (HKG:2181) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 21st of June. 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 Mabpharm

How Does Total Compensation For Hao Wang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Mabpharm Limited has a market capitalization of HK$1.5b, and reported total annual CEO compensation of CN¥5.6m for the year to December 2023. That's a notable increase of 70% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CN¥1.1m.

In comparison with other companies in the Hong Kong Biotechs industry with market capitalizations ranging from HK$781m to HK$3.1b, the reported median CEO total compensation was CN¥7.7m. From this we gather that Hao Wang is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.1m	CN¥1.1m	19%
Other	CN¥4.5m	CN¥2.2m	81%
Total Compensation	CN¥5.6m	CN¥3.3m	100%

On an industry level, around 45% of total compensation represents salary and 55% is other remuneration. In Mabpharm's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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.

Mabpharm Limited's Growth

Mabpharm Limited's earnings per share (EPS) grew 7.2% per year over the last three years. Its revenue is up 56% over the last year.

We like the look of the strong year-on-year improvement in revenue. With that in mind, the modestly improving EPS seems positive. So while we'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! 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 Mabpharm Limited Been A Good Investment?

With a total shareholder return of -68% over three years, Mabpharm Limited shareholders would by and large be disappointed. 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 on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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. We've identified 1 warning sign for Mabpharm that investors should be aware of in a dynamic business environment.

Switching gears from Mabpharm, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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