Most Shareholders Will Probably Find That The Compensation For Mesoblast Limited's (ASX:MSB) CEO Is Reasonable
Key Insights
Mesoblast's Annual General Meeting to take place on 28th of November
Salary of US$672.7k is part of CEO Silviu Itescu's total remuneration
Total compensation is 51% below industry average
Over the past three years, Mesoblast's EPS grew by 14% and over the past three years, the total loss to shareholders 91%
Shareholders may be wondering what CEO Silviu Itescu plans to do to improve the less than great performance at Mesoblast Limited (ASX:MSB) recently. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 28th of November. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.
Check out our latest analysis for Mesoblast
How Does Total Compensation For Silviu Itescu Compare With Other Companies In The Industry?
Our data indicates that Mesoblast Limited has a market capitalization of AU$297m, and total annual CEO compensation was reported as US$1.1m for the year to June 2023. That's a notable decrease of 18% on last year. Notably, the salary which is US$672.7k, represents most of the total compensation being paid.
On examining similar-sized companies in the Australian Biotechs industry with market capitalizations between AU$153m and AU$610m, we discovered that the median CEO total compensation of that group was US$2.3m. That is to say, Silviu Itescu is paid under the industry median. Moreover, Silviu Itescu also holds AU$25m worth of Mesoblast stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$673k | US$697k | 61% |
Other | US$437k | US$662k | 39% |
Total Compensation | US$1.1m | US$1.4m | 100% |
On an industry level, roughly 60% of total compensation represents salary and 40% is other remuneration. Mesoblast is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Mesoblast Limited's Growth Numbers
Mesoblast Limited's earnings per share (EPS) grew 14% per year over the last three years. Its revenue is down 27% over the previous year.
Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Mesoblast Limited Been A Good Investment?
Few Mesoblast Limited shareholders would feel satisfied with the return of -91% over three years. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
The fact that shareholders are sitting on a loss is certainly disheartening. This contrasts to the strong EPS growth recently however, and suggests that there may be other factors at play driving down the share price. A key focus for the board and management will be how to align the share price with fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Mesoblast that investors should look into moving forward.
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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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.
