Here's Why Shareholders May Want To Be Cautious With Increasing RemeGen Co., Ltd.'s (HKG:9995) CEO Pay Packet

Key Insights

• RemeGen's Annual General Meeting to take place on 28th of June
• CEO Jianmin Fang's total compensation includes salary of CN¥5.43m
• The total compensation is 385% higher than the average for the industry
• Over the past three years, RemeGen's EPS fell by 40% and over the past three years, the total loss to shareholders 79%

Shareholders of RemeGen Co., Ltd. (HKG:9995) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 28th of June will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

See our latest analysis for RemeGen

How Does Total Compensation For Jianmin Fang Compare With Other Companies In The Industry?

Our data indicates that RemeGen Co., Ltd. has a market capitalization of HK$23b, and total annual CEO compensation was reported as CN¥15m for the year to December 2023. Notably, that's a decrease of 45% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥5.4m.

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 Jianmin Fang is paid more than the median for the industry. Moreover, Jianmin Fang also holds HK$1.6b worth of RemeGen stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥5.4m	CN¥5.4m	37%
Other	CN¥9.2m	CN¥21m	63%
Total Compensation	CN¥15m	CN¥27m	100%

On an industry level, roughly 46% of total compensation represents salary and 54% is other remuneration. RemeGen sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

RemeGen Co., Ltd.'s Growth

Over the last three years, RemeGen Co., Ltd. has shrunk its earnings per share by 40% per year. In the last year, its revenue is up 58%.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has RemeGen Co., Ltd. Been A Good Investment?

With a total shareholder return of -79% over three years, RemeGen Co., Ltd. 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 company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for RemeGen that investors should look into moving forward.

Important note: RemeGen is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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