It's Unlikely That The CEO Of AFT Pharmaceuticals Limited (NZSE:AFT) Will See A Huge Pay Rise This Year

Key Insights

• AFT Pharmaceuticals to hold its Annual General Meeting on 2nd of August
• CEO Hartley Atkinson's total compensation includes salary of NZ$670.0k
• The total compensation is similar to the average for the industry
• Over the past three years, AFT Pharmaceuticals' EPS grew by 27% and over the past three years, the total loss to shareholders 32%

The underwhelming share price performance of AFT Pharmaceuticals Limited (NZSE:AFT) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 2nd of August. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for AFT Pharmaceuticals

How Does Total Compensation For Hartley Atkinson Compare With Other Companies In The Industry?

According to our data, AFT Pharmaceuticals Limited has a market capitalization of NZ$324m, and paid its CEO total annual compensation worth NZ$975k over the year to March 2024. That's just a smallish increase of 4.7% on last year. Notably, the salary which is NZ$670.0k, represents most of the total compensation being paid.

For comparison, other companies in the New Zealand Pharmaceuticals industry with market capitalizations ranging between NZ$170m and NZ$678m had a median total CEO compensation of NZ$809k. This suggests that AFT Pharmaceuticals remunerates its CEO largely in line with the industry average. Furthermore, Hartley Atkinson directly owns NZ$223m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	NZ$670k	NZ$606k	69%
Other	NZ$305k	NZ$325k	31%
Total Compensation	NZ$975k	NZ$931k	100%

Talking in terms of the industry, salary represented approximately 61% of total compensation out of all the companies we analyzed, while other remuneration made up 39% of the pie. It's interesting to note that AFT Pharmaceuticals pays out a greater portion of remuneration through salary, compared to the industry. 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.

AFT Pharmaceuticals Limited's Growth

Over the past three years, AFT Pharmaceuticals Limited has seen its earnings per share (EPS) grow by 27% per year. Its revenue is up 25% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 AFT Pharmaceuticals Limited Been A Good Investment?

Few AFT Pharmaceuticals Limited shareholders would feel satisfied with the return of -32% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. 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. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for AFT Pharmaceuticals that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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