Here's Why Zai Lab Limited's (NASDAQ:ZLAB) CEO May Have Their Pay Bumped Up

By
Simply Wall St
Published
June 19, 2021
NasdaqGM:ZLAB
Source: Shutterstock

Shareholders will probably not be disappointed by the robust results at Zai Lab Limited (NASDAQ:ZLAB) recently and they will be keeping this in mind as they go into the AGM on 24 June 2021. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

See our latest analysis for Zai Lab

Comparing Zai Lab Limited's CEO Compensation With the industry

According to our data, Zai Lab Limited has a market capitalization of US$15b, and paid its CEO total annual compensation worth US$8.5m over the year to December 2020. That's a slight decrease of 3.8% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$689k.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$16m. In other words, Zai Lab pays its CEO lower than the industry median. Moreover, Samantha Du also holds US$164m worth of Zai Lab stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$689k US$656k 8%
Other US$7.8m US$8.2m 92%
Total CompensationUS$8.5m US$8.9m100%

On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. Zai Lab sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NasdaqGM:ZLAB CEO Compensation June 20th 2021

Zai Lab Limited's Growth

Zai Lab Limited has reduced its earnings per share by 29% a year over the last three years. In the last year, its revenue is up 212%.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Zai Lab Limited Been A Good Investment?

We think that the total shareholder return of 573%, over three years, would leave most Zai Lab Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

The company's overall performance, while not bad, could be better. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Zai Lab that you should be aware of before investing.

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.

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