Yahoo Finance Shareholders Will Probably Not Have Any Issues With Xenon Pharmaceuticals Inc.'s (NASDAQ:XENE) CEO Compensation
Key Insights
Xenon Pharmaceuticals to hold its Annual General Meeting on 4th of June
Total pay for CEO Ian Mortimer includes US$666.0k salary
The total compensation is similar to the average for the industry
Xenon Pharmaceuticals' EPS declined by 28% over the past three years while total shareholder return over the past three years was 109%
Despite strong share price growth of 109% for Xenon Pharmaceuticals Inc. (NASDAQ:XENE) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 4th of June. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
Check out our latest analysis for Xenon Pharmaceuticals
Comparing Xenon Pharmaceuticals Inc.'s CEO Compensation With The Industry
At the time of writing, our data shows that Xenon Pharmaceuticals Inc. has a market capitalization of US$2.9b, and reported total annual CEO compensation of US$10m for the year to December 2023. Notably, that's an increase of 9.6% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$666k.
On examining similar-sized companies in the American Biotechs industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$8.6m. So it looks like Xenon Pharmaceuticals compensates Ian Mortimer in line with the median for the industry. What's more, Ian Mortimer holds US$1.8m worth of shares in the company in their own name.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$666k | US$595k | 7% |
Other | US$9.5m | US$8.6m | 93% |
Total Compensation | US$10m | US$9.2m | 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. Xenon Pharmaceuticals 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 Xenon Pharmaceuticals Inc.'s Growth Numbers
Over the last three years, Xenon Pharmaceuticals Inc. has shrunk its earnings per share by 28% per year. In the last year, the company lost virtually all of its revenue.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Xenon Pharmaceuticals Inc. Been A Good Investment?
Most shareholders would probably be pleased with Xenon Pharmaceuticals Inc. for providing a total return of 109% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
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. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
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. We identified 4 warning signs for Xenon Pharmaceuticals (1 shouldn't be ignored!) that you should be aware of before investing here.
Important note: Xenon Pharmaceuticals 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.
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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.
