We Discuss Why KalVista Pharmaceuticals, Inc.'s (NASDAQ:KALV) CEO Compensation May Be Closely Reviewed

The results at KalVista Pharmaceuticals, Inc. (NASDAQ:KALV) have been quite disappointing recently and CEO Andy Crockett bears some responsibility for this. At the upcoming AGM on 30 September 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for KalVista Pharmaceuticals

Comparing KalVista Pharmaceuticals, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that KalVista Pharmaceuticals, Inc. has a market capitalization of US$455m, and reported total annual CEO compensation of US$2.3m for the year to April 2021. We note that's an increase of 18% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$556k.

In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$2.4m. So it looks like KalVista Pharmaceuticals compensates Andy Crockett in line with the median for the industry. Moreover, Andy Crockett also holds US$5.1m worth of KalVista Pharmaceuticals stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	US$556k	US$556k	24%
Other	US$1.8m	US$1.4m	76%
Total Compensation	US$2.3m	US$2.0m	100%

On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. It's interesting to note that KalVista Pharmaceuticals pays out a greater portion of remuneration through salary, compared to the industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at KalVista Pharmaceuticals, Inc.'s Growth Numbers

Over the last three years, KalVista Pharmaceuticals, Inc. has shrunk its earnings per share by 25% per year. In the last year, its revenue has collapsed effectively to zero.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 KalVista Pharmaceuticals, Inc. Been A Good Investment?

Since shareholders would have lost about 14% over three years, some KalVista Pharmaceuticals, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

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. That's why we did our research, and identified 4 warning signs for KalVista Pharmaceuticals (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: KalVista Pharmaceuticals 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.
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