Akeso, Inc.'s (HKG:9926) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Akeso to hold its Annual General Meeting on 30th of June
• Total pay for CEO Michelle Xia includes CN¥4.37m salary
• The total compensation is 116% higher than the average for the industry
• Akeso's EPS grew by 88% over the past three years while total shareholder loss over the past three years was 44%

The underwhelming share price performance of Akeso, Inc. (HKG:9926) in the past three years would have disappointed many shareholders. 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 30th 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.

View our latest analysis for Akeso

Comparing Akeso, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Akeso, Inc. has a market capitalization of HK$31b, and reported total annual CEO compensation of CN¥6.5m for the year to December 2023. That's a notable increase of 24% on last year. Notably, the salary which is CN¥4.37m, represents most of the total compensation being paid.

On comparing similar companies from the Hong Kong Biotechs industry with market caps ranging from HK$16b to HK$50b, we found that the median CEO total compensation was CN¥3.0m. This suggests that Michelle Xia is paid more than the median for the industry. What's more, Michelle Xia holds HK$2.8b 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¥4.4m	CN¥4.0m	67%
Other	CN¥2.2m	CN¥1.2m	33%
Total Compensation	CN¥6.5m	CN¥5.3m	100%

Speaking on an industry level, nearly 46% of total compensation represents salary, while the remainder of 54% is other remuneration. According to our research, Akeso has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Akeso, Inc.'s Growth

Over the past three years, Akeso, Inc. has seen its earnings per share (EPS) grow by 88% per year. In the last year, its revenue is up 440%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Akeso, Inc. Been A Good Investment?

The return of -44% over three years would not have pleased Akeso, Inc. shareholders. 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 stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Akeso that investors should look into moving forward.

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