Yahoo Finance Increases to CEO Compensation Might Be Put On Hold For Now at Zai Lab Limited (NASDAQ:ZLAB)
Key Insights
Zai Lab's Annual General Meeting to take place on 18th of June
CEO Samantha Du's total compensation includes salary of US$868.5k
Total compensation is 67% above industry average
Zai Lab's three-year loss to shareholders was 88% while its EPS grew by 23% over the past three years
In the past three years, the share price of Zai Lab Limited (NASDAQ:ZLAB) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 18th of June. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
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$2.0b, and paid its CEO total annual compensation worth US$12m over the year to December 2023. That's a notable decrease of 40% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$869k.
For comparison, other companies in the American Biotechs industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$7.2m. This suggests that Samantha Du is paid more than the median for the industry. Furthermore, Samantha Du directly owns US$22m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$869k | US$830k | 7% |
Other | US$11m | US$19m | 93% |
Total Compensation | US$12m | US$20m | 100% |
Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. Zai Lab sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Zai Lab Limited's Growth Numbers
Zai Lab Limited has seen its earnings per share (EPS) increase by 23% a year over the past three years. Its revenue is up 26% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Zai Lab Limited Been A Good Investment?
Few Zai Lab 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.
In Summary...
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders 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 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 investors should think about before committing capital to this 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.
