Advertisement
Australia markets closed
  • ALL ORDS

    8,262.40
    +56.30 (+0.69%)
     
  • AUD/USD

    0.6781
    -0.0005 (-0.07%)
     
  • ASX 200

    8,017.60
    +58.30 (+0.73%)
     
  • OIL

    82.28
    +0.07 (+0.09%)
     
  • GOLD

    2,415.30
    -5.40 (-0.22%)
     
  • Bitcoin AUD

    92,525.88
    +3,767.86 (+4.25%)
     
  • CMC Crypto 200

    1,306.98
    +38.03 (+3.00%)
     

We Think The Compensation For Vectus Biosystems Limited's (ASX:VBS) CEO Looks About Right

Key Insights

  • Vectus Biosystems to hold its Annual General Meeting on 22nd of November

  • Salary of AU$231.5k is part of CEO Karen Duggan's total remuneration

  • The overall pay is 56% below the industry average

  • Over the past three years, Vectus Biosystems' EPS grew by 21% and over the past three years, the total loss to shareholders 68%

The performance at Vectus Biosystems Limited (ASX:VBS) has been rather lacklustre of late and shareholders may be wondering what CEO Karen Duggan is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 22nd of November. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for Vectus Biosystems

Comparing Vectus Biosystems Limited's CEO Compensation With The Industry

Our data indicates that Vectus Biosystems Limited has a market capitalization of AU$17m, and total annual CEO compensation was reported as AU$256k for the year to June 2023. Notably, that's an increase of 11% over the year before. In particular, the salary of AU$231.5k, makes up a huge portion of the total compensation being paid to the CEO.

ADVERTISEMENT

On comparing similar-sized companies in the Australian Biotechs industry with market capitalizations below AU$306m, we found that the median total CEO compensation was AU$585k. That is to say, Karen Duggan is paid under the industry median. Moreover, Karen Duggan also holds AU$1.0m worth of Vectus Biosystems 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$231k

AU$209k

91%

Other

AU$24k

AU$21k

9%

Total Compensation

AU$256k

AU$230k

100%

Talking in terms of the industry, salary represented approximately 60% of total compensation out of all the companies we analyzed, while other remuneration made up 40% of the pie. Vectus Biosystems pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
ceo-compensation

A Look at Vectus Biosystems Limited's Growth Numbers

Over the past three years, Vectus Biosystems Limited has seen its earnings per share (EPS) grow by 21% per year. Its revenue is up 4.2% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Vectus Biosystems Limited Been A Good Investment?

Few Vectus Biosystems Limited shareholders would feel satisfied with the return of -68% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders have earned a negative share price return is certainly disconcerting. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. A key question may be why the fundamentals have not yet been reflected into the share price. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 5 warning signs for Vectus Biosystems you should be aware of, and 3 of them don't sit too well with us.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.