Is Prescient Therapeutics Limited's (ASX:PTX) CEO Being Overpaid?
In 2016, Yatomi-Clarke Lee was appointed CEO of Prescient Therapeutics Limited (ASX:PTX). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for Prescient Therapeutics
How Does Yatomi-Clarke Lee's Compensation Compare With Similar Sized Companies?
According to our data, Prescient Therapeutics Limited has a market capitalization of AU$19m, and paid its CEO total annual compensation worth AU$586k over the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$367k. We took a group of companies with market capitalizations below AU$306m, and calculated the median CEO total compensation to be AU$389k.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Prescient Therapeutics stands. Speaking on an industry level, we can see that nearly 63% of total compensation represents salary, while the remainder of 37% is other remuneration. Prescient Therapeutics does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.
Thus we can conclude that Yatomi-Clarke Lee receives more in total compensation than the median of a group of companies in the same market, and of similar size to Prescient Therapeutics Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. The graphic below shows how CEO compensation at Prescient Therapeutics has changed from year to year.
Is Prescient Therapeutics Limited Growing?
Prescient Therapeutics Limited has reduced its earnings per share by an average of 1.7% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 29%.
Investors should note that, over three years, earnings per share are down. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. It could be important to check this free visual depiction of what analysts expect for the future.
Has Prescient Therapeutics Limited Been A Good Investment?
With a three year total loss of 49%, Prescient Therapeutics Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
We compared total CEO remuneration at Prescient Therapeutics Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Shareholders may wish to consider further research. Although we don't think the CEO pay is too high, it is probably more on the generous side of things. Looking into other areas, we've picked out 4 warning signs for Prescient Therapeutics that investors should think about before committing capital to this stock.
If you want to buy a stock that is better than Prescient Therapeutics, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.