Increases to Aytu Biopharma, Inc.'s (NASDAQ:AYTU) CEO Compensation Might Cool off for now

In the past three years, the share price of Aytu Biopharma, Inc. (NASDAQ:AYTU) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 21 May 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Aytu Biopharma

How Does Total Compensation For Josh Disbrow Compare With Other Companies In The Industry?

Our data indicates that Aytu Biopharma, Inc. has a market capitalization of US$126m, and total annual CEO compensation was reported as US$1.6m for the year to June 2020. Notably, that's an increase of 52% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$608k.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$732k. Accordingly, our analysis reveals that Aytu Biopharma, Inc. pays Josh Disbrow north of the industry median. Moreover, Josh Disbrow also holds US$4.8m worth of Aytu Biopharma stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$608k	US$330k	38%
Other	US$978k	US$714k	62%
Total Compensation	US$1.6m	US$1.0m	100%

On an industry level, around 28% of total compensation represents salary and 72% is other remuneration. Aytu Biopharma is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Aytu Biopharma, Inc.'s Growth Numbers

Over the past three years, Aytu Biopharma, Inc. has seen its earnings per share (EPS) grow by 156% per year. In the last year, its revenue is up 489%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Aytu Biopharma, Inc. Been A Good Investment?

With a total shareholder return of -93% over three years, Aytu Biopharma, Inc. shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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 pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is potentially serious) in Aytu Biopharma we think you should know about.

Important note: Aytu Biopharma 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. 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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