It's Unlikely That The CEO Of Recce Pharmaceuticals Ltd (ASX:RCE) Will See A Huge Pay Rise This Year
Key Insights
Recce Pharmaceuticals' Annual General Meeting to take place on 7th of November
Salary of AU$550.8k is part of CEO James Graham's total remuneration
The overall pay is comparable to the industry average
Over the past three years, Recce Pharmaceuticals' EPS fell by 2.8% and over the past three years, the total loss to shareholders 54%
The underwhelming share price performance of Recce Pharmaceuticals Ltd (ASX:RCE) in the past three years would have disappointed many shareholders. Per share earnings growth is also lacking, despite revenue growth. The AGM coming up on 7th of November will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.
Check out our latest analysis for Recce Pharmaceuticals
Comparing Recce Pharmaceuticals Ltd's CEO Compensation With The Industry
At the time of writing, our data shows that Recce Pharmaceuticals Ltd has a market capitalization of AU$89m, and reported total annual CEO compensation of AU$775k for the year to June 2023. Notably, that's an increase of 41% over the year before. We note that the salary portion, which stands at AU$550.8k constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the Australian Pharmaceuticals industry with market capitalizations below AU$315m, we found that the median total CEO compensation was AU$688k. From this we gather that James Graham is paid around the median for CEOs in the industry. Moreover, James Graham also holds AU$2.9m worth of Recce Pharmaceuticals 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 | AU$551k | AU$328k | 71% |
Other | AU$224k | AU$220k | 29% |
Total Compensation | AU$775k | AU$548k | 100% |
Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. Recce Pharmaceuticals pays out 71% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Recce Pharmaceuticals Ltd's Growth Numbers
Recce Pharmaceuticals Ltd has reduced its earnings per share by 2.8% a year over the last three years. Its revenue is up 42% over the last year.
The reduction in EPS, over three years, is arguably concerning. 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 Recce Pharmaceuticals Ltd Been A Good Investment?
With a total shareholder return of -54% over three years, Recce Pharmaceuticals Ltd shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. Shareholders will get the chance at the upcoming AGM 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 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 7 warning signs for Recce Pharmaceuticals (of which 3 are potentially serious!) that you should know about in order to have a holistic understanding of the stock.
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.
