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This article will reflect on the compensation paid to Doug Janzen who has served as CEO of Aequus Pharmaceuticals Inc. (CVE:AQS) since 2014. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Doug Janzen Compare With Other Companies In The Industry?
At the time of writing, our data shows that Aequus Pharmaceuticals Inc. has a market capitalization of CA$13m, and reported total annual CEO compensation of CA$191k for the year to December 2019. That's a modest increase of 6.3% on the prior year. Notably, the salary of CA$191k is the entirety of the CEO compensation.
In comparison with other companies in the industry with market capitalizations under CA$263m, the reported median total CEO compensation was CA$245k. So it looks like Aequus Pharmaceuticals compensates Doug Janzen in line with the median for the industry. Furthermore, Doug Janzen directly owns CA$992k worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 78% of total compensation represents salary and 22% is other remuneration. Speaking on a company level, Aequus Pharmaceuticals prefers to tread along a traditional path, disbursing all compensation through a salary. 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.
Aequus Pharmaceuticals Inc.'s Growth
Aequus Pharmaceuticals Inc. has seen its earnings per share (EPS) increase by 31% a year over the past three years. In the last year, its revenue is up 47%.
This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Aequus Pharmaceuticals Inc. Been A Good Investment?
Since shareholders would have lost about 30% over three years, some Aequus Pharmaceuticals Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Aequus Pharmaceuticals pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we touched on above, Aequus Pharmaceuticals Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, the company has logged negative shareholder returns over the last three years. However, EPS growth is positive over the same time frame. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 5 warning signs for Aequus Pharmaceuticals you should be aware of, and 2 of them are a bit unpleasant.
Important note: Aequus 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.
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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