Alterity Therapeutics' Annual General Meeting to take place on 28th of November
CEO David Stamler's total compensation includes salary of AU$731.4k
The overall pay is 183% above the industry average
Over the past three years, Alterity Therapeutics' EPS grew by 41% and over the past three years, the total loss to shareholders 88%
The underwhelming share price performance of Alterity Therapeutics Limited (ASX:ATH) 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. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 28th of November. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
Comparing Alterity Therapeutics Limited's CEO Compensation With The Industry
At the time of writing, our data shows that Alterity Therapeutics Limited has a market capitalization of AU$9.8m, and reported total annual CEO compensation of AU$1.6m for the year to June 2023. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$731k.
For comparison, other companies in the Australian Biotechs industry with market capitalizations below AU$305m, reported a median total CEO compensation of AU$583k. This suggests that David Stamler is paid more than the median for the industry.
On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. It's interesting to note that Alterity Therapeutics allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Alterity Therapeutics Limited's Growth
Alterity Therapeutics Limited has seen its earnings per share (EPS) increase by 41% a year over the past three years. Its revenue is down 24% over the previous year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Alterity Therapeutics Limited Been A Good Investment?
Few Alterity Therapeutics Limited shareholders would feel satisfied with the return of -88% over three years. This suggests it would be unwise for the company to pay the CEO too generously.
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
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 6 warning signs for Alterity Therapeutics (of which 4 don't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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.