Shareholders Will Probably Hold Off On Increasing Kronos Bio, Inc.'s (NASDAQ:KRON) CEO Compensation For The Time Being

Key Insights

• Kronos Bio to hold its Annual General Meeting on 25th of June
• CEO Norbert Bischofberger's total compensation includes salary of US$580.0k
• Total compensation is 51% above industry average
• Kronos Bio's EPS grew by 19% over the past three years while total shareholder loss over the past three years was 96%

The underwhelming share price performance of Kronos Bio, Inc. (NASDAQ:KRON) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 25th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Kronos Bio

Comparing Kronos Bio, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Kronos Bio, Inc. has a market capitalization of US$61m, and reported total annual CEO compensation of US$1.8m for the year to December 2023. That's a notable decrease of 37% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$580k.

In comparison with other companies in the American Biotechs industry with market capitalizations under US$200m, the reported median total CEO compensation was US$1.2m. Hence, we can conclude that Norbert Bischofberger is remunerated higher than the industry median. What's more, Norbert Bischofberger holds US$11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. It's interesting to note that Kronos Bio pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Kronos Bio, Inc.'s Growth

Over the past three years, Kronos Bio, Inc. has seen its earnings per share (EPS) grow by 19% per year. Its revenue is up 521% 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 Kronos Bio, Inc. Been A Good Investment?

With a total shareholder return of -96% over three years, Kronos Bio, Inc. shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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 can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 4 warning signs for Kronos Bio that you should be aware of before investing.

Switching gears from Kronos Bio, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.

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