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The underwhelming share price performance of CytomX Therapeutics, Inc. (NASDAQ:CTMX) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 16 June 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. 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 CytomX Therapeutics, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that CytomX Therapeutics, Inc. has a market capitalization of US$458m, and reported total annual CEO compensation of US$2.8m for the year to December 2020. We note that's a decrease of 24% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$595k.
For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$2.3m. From this we gather that Sean McCarthy is paid around the median for CEOs in the industry. Moreover, Sean McCarthy also holds US$1.4m worth of CytomX Therapeutics stock directly under their own name.
Speaking on an industry level, nearly 20% of total compensation represents salary, while the remainder of 80% is other remuneration. There isn't a significant difference between CytomX Therapeutics and the broader market, in terms of salary allocation in the overall compensation package. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
CytomX Therapeutics, Inc.'s Growth
CytomX Therapeutics, Inc.'s earnings per share (EPS) grew 7.2% per year over the last three years. It saw its revenue drop 14% over the last year.
We would prefer it if there was revenue growth, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has CytomX Therapeutics, Inc. Been A Good Investment?
Few CytomX Therapeutics, Inc. shareholders would feel satisfied with the return of -72% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. 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.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for CytomX Therapeutics (1 is concerning!) that you should be aware of before investing here.
Important note: CytomX Therapeutics 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.
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. 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.
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