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Cyclopharm Limited (ASX:CYC) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 04 May 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
How Does Total Compensation For James McBrayer Compare With Other Companies In The Industry?
According to our data, Cyclopharm Limited has a market capitalization of AU$241m, and paid its CEO total annual compensation worth AU$1.2m over the year to December 2020. That's a notable increase of 58% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$406k.
On comparing similar companies from the same industry with market caps ranging from AU$129m to AU$517m, we found that the median CEO total compensation was AU$510k. Hence, we can conclude that James McBrayer is remunerated higher than the industry median. What's more, James McBrayer holds AU$14m 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, around 67% of total compensation represents salary and 33% is other remuneration. It's interesting to note that Cyclopharm allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Cyclopharm Limited's Growth
Cyclopharm Limited has reduced its earnings per share by 69% a year over the last three years. In the last year, its revenue is up 4.0%.
The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Cyclopharm Limited Been A Good Investment?
Boasting a total shareholder return of 154% over three years, Cyclopharm Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Cyclopharm that investors should think about before committing capital to this stock.
Important note: Cyclopharm 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.
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.
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