We Think Shareholders Are Less Likely To Approve A Pay Rise For CytomX Therapeutics, Inc.'s (NASDAQ:CTMX) CEO For Now

Key Insights

• CytomX Therapeutics to hold its Annual General Meeting on 15th of May
• Total pay for CEO Sean McCarthy includes US$652.1k salary
• The overall pay is comparable to the industry average
• CytomX Therapeutics' three-year loss to shareholders was 49% while its EPS grew by 29% over the past three years

The underwhelming share price performance of CytomX Therapeutics, Inc. (NASDAQ:CTMX) 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. The AGM coming up on the 15th of May 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.

Check out our latest analysis for CytomX Therapeutics

How Does Total Compensation For Sean McCarthy Compare With Other Companies In The Industry?

At the time of writing, our data shows that CytomX Therapeutics, Inc. has a market capitalization of US$284m, and reported total annual CEO compensation of US$2.6m for the year to December 2023. That's a notable decrease of 13% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$652k.

On examining similar-sized companies in the American Biotechs industry with market capitalizations between US$100m and US$400m, we discovered that the median CEO total compensation of that group was US$2.7m. From this we gather that Sean McCarthy is paid around the median for CEOs in the industry. Furthermore, Sean McCarthy directly owns US$2.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$652k	US$623k	25%
Other	US$2.0m	US$2.4m	75%
Total Compensation	US$2.6m	US$3.0m	100%

Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. CytomX Therapeutics is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

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

Over the past three years, CytomX Therapeutics, Inc. has seen its earnings per share (EPS) grow by 29% per year. In the last year, its revenue is up 90%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has CytomX Therapeutics, Inc. Been A Good Investment?

The return of -49% over three years would not have pleased CytomX Therapeutics, Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too 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 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. We identified 6 warning signs for CytomX Therapeutics (3 are concerning!) that you should be aware of before investing here.

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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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.