Here's Why Shareholders May Want To Be Cautious With Increasing Genocea Biosciences, Inc.'s (NASDAQ:GNCA) CEO Pay Packet

The underwhelming share price performance of Genocea Biosciences, Inc. (NASDAQ:GNCA) 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. These are some of the concerns that shareholders may want to bring up at the next AGM held on 24 June 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. 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 Genocea Biosciences

How Does Total Compensation For Chip Clark Compare With Other Companies In The Industry?

Our data indicates that Genocea Biosciences, Inc. has a market capitalization of US$128m, and total annual CEO compensation was reported as US$1.5m for the year to December 2020. Notably, that's an increase of 37% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$551k.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$1.2m. So it looks like Genocea Biosciences compensates Chip Clark in line with the median for the industry. Moreover, Chip Clark also holds US$150k worth of Genocea Biosciences stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	US$551k	US$533k	38%
Other	US$910k	US$530k	62%
Total Compensation	US$1.5m	US$1.1m	100%

Speaking on an industry level, nearly 20% of total compensation represents salary, while the remainder of 80% is other remuneration. According to our research, Genocea Biosciences has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Genocea Biosciences, Inc.'s Growth

Over the past three years, Genocea Biosciences, Inc. has seen its earnings per share (EPS) grow by 83% per year. Its revenue is up 65% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing 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 Genocea Biosciences, Inc. Been A Good Investment?

With a total shareholder return of -70% over three years, Genocea Biosciences, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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. 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 pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Genocea Biosciences (1 is a bit unpleasant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

If you decide to trade Genocea Biosciences, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.