Shareholders May Find It Hard To Justify Increasing Allogene Therapeutics, Inc.'s (NASDAQ:ALLO) CEO Compensation For Now

Key Insights

• Allogene Therapeutics to hold its Annual General Meeting on 18th of June
• Salary of US$724.0k is part of CEO David Chang's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, Allogene Therapeutics' EPS grew by 19% and over the past three years, the total loss to shareholders 85%

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Shareholders of Allogene Therapeutics, Inc. (NASDAQ:ALLO) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 18th of June could be an opportunity for shareholders to bring these concerns to the board's attention. 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.

View our latest analysis for Allogene Therapeutics

How Does Total Compensation For David Chang Compare With Other Companies In The Industry?

Our data indicates that Allogene Therapeutics, Inc. has a market capitalization of US$319m, and total annual CEO compensation was reported as US$4.5m for the year to December 2024. That's a notable decrease of 68% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$724k.

On comparing similar companies from the American Biotechs industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$4.4m. This suggests that Allogene Therapeutics remunerates its CEO largely in line with the industry average. Furthermore, David Chang directly owns US$13m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. In Allogene Therapeutics' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Allogene Therapeutics, Inc.'s Growth

Allogene Therapeutics, Inc. has seen its earnings per share (EPS) increase by 19% a year over the past three years. It has seen most of its revenue evaporate over the past year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in 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 Allogene Therapeutics, Inc. Been A Good Investment?

With a total shareholder return of -85% over three years, Allogene Therapeutics, Inc. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Allogene Therapeutics you should be aware of, and 1 of them doesn't sit too well with us.

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.