Stock Analysis

Shareholders Will Probably Hold Off On Increasing CytomX Therapeutics, Inc.'s (NASDAQ:CTMX) CEO Compensation For The Time Being

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In the past three years, the share price of CytomX Therapeutics, Inc. (NASDAQ:CTMX) has struggled to grow and now shareholders are sitting on a loss. 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 16 June 2021 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. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for CytomX Therapeutics

Comparing CytomX Therapeutics, Inc.'s CEO Compensation With the industry

According to our data, CytomX Therapeutics, Inc. has a market capitalization of US$458m, and paid its CEO total annual compensation worth US$2.8m over the year to December 2020. Notably, that's a decrease of 24% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$595k.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$2.3m. This suggests that CytomX Therapeutics remunerates its CEO largely in line with the industry average. Furthermore, Sean McCarthy directly owns US$1.4m worth of shares in the company.

Component20202019Proportion (2020)
Salary US$595k US$575k 21%
Other US$2.3m US$3.2m 79%
Total CompensationUS$2.8m US$3.8m100%

On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. There isn't a significant difference between CytomX Therapeutics and the broader market, in terms of salary allocation in the overall compensation package. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NasdaqGS:CTMX CEO Compensation June 10th 2021

A Look at CytomX Therapeutics, Inc.'s Growth Numbers

CytomX Therapeutics, Inc.'s earnings per share (EPS) grew 7.2% per year over the last three years. It saw its revenue drop 14% over the last year.

We would prefer it if there was revenue growth, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has CytomX Therapeutics, Inc. Been A Good Investment?

Few CytomX Therapeutics, Inc. shareholders would feel satisfied with the return of -72% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 4 warning signs for CytomX Therapeutics you should be aware of, and 1 of them can't be ignored.

Important note: CytomX Therapeutics 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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