We Think Some Shareholders May Hesitate To Increase BeiGene, Ltd.'s (NASDAQ:BGNE) CEO Compensation

Key Insights

• BeiGene will host its Annual General Meeting on 5th of June
• Total pay for CEO John Oyler includes US$871.0k salary
• The overall pay is comparable to the industry average
• Over the past three years, BeiGene's EPS grew by 13% and over the past three years, the total loss to shareholders 58%

Shareholders of BeiGene, Ltd. (NASDAQ:BGNE) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 5th of June could be an opportunity for shareholders to bring these concerns to the board's attention. 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.

See our latest analysis for BeiGene

Comparing BeiGene, Ltd.'s CEO Compensation With The Industry

According to our data, BeiGene, Ltd. has a market capitalization of US$16b, and paid its CEO total annual compensation worth US$19m over the year to December 2023. That's just a smallish increase of 4.9% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$871k.

For comparison, other companies in the American Biotechs industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$17m. This suggests that BeiGene remunerates its CEO largely in line with the industry average. Moreover, John Oyler also holds US$545m worth of BeiGene 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	US$871k	US$800k	5%
Other	US$18m	US$17m	95%
Total Compensation	US$19m	US$18m	100%

Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to John Oyler as compared to non-salary compensation over the one-year period examined. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at BeiGene, Ltd.'s Growth Numbers

BeiGene, Ltd. has seen its earnings per share (EPS) increase by 13% a year over the past three years. It achieved revenue growth of 77% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few 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 BeiGene, Ltd. Been A Good Investment?

The return of -58% over three years would not have pleased BeiGene, Ltd. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

BeiGene prefers rewarding its CEO through non-salary benefits. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for BeiGene that investors should think about before committing capital to this stock.

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.