Stock Analysis

Does Jacobson Pharma's (HKG:2633) CEO Salary Compare Well With The Performance Of The Company?

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The CEO of Jacobson Pharma Corporation Limited (HKG:2633) is Derek Sum, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Jacobson Pharma.

View our latest analysis for Jacobson Pharma

Comparing Jacobson Pharma Corporation Limited's CEO Compensation With the industry

At the time of writing, our data shows that Jacobson Pharma Corporation Limited has a market capitalization of HK$2.2b, and reported total annual CEO compensation of HK$5.0m for the year to March 2020. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at HK$3.55m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from HK$775m to HK$3.1b, we found that the median CEO total compensation was HK$1.9m. Accordingly, our analysis reveals that Jacobson Pharma Corporation Limited pays Derek Sum north of the industry median. Furthermore, Derek Sum directly owns HK$1.3b worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary HK$3.5m HK$3.5m 72%
Other HK$1.4m HK$1.4m 28%
Total CompensationHK$5.0m HK$5.0m100%

Talking in terms of the industry, salary represented approximately 59% of total compensation out of all the companies we analyzed, while other remuneration made up 41% of the pie. Jacobson Pharma is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

SEHK:2633 CEO Compensation December 28th 2020

A Look at Jacobson Pharma Corporation Limited's Growth Numbers

Over the last three years, Jacobson Pharma Corporation Limited has shrunk its earnings per share by 4.0% per year. It achieved revenue growth of 6.3% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Jacobson Pharma Corporation Limited Been A Good Investment?

Given the total shareholder loss of 40% over three years, many shareholders in Jacobson Pharma Corporation Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, Jacobson Pharma Corporation Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Jacobson Pharma that investors should be aware of in a dynamic business environment.

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. 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.
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