Key Insights

• Aurinia Pharmaceuticals to hold its Annual General Meeting on 14th of June
• Total pay for CEO Peter Greenleaf includes US$822.9k salary
• The overall pay is 157% above the industry average
• Aurinia Pharmaceuticals' EPS grew by 34% over the past three years while total shareholder loss over the past three years was 59%

The underwhelming share price performance of Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) 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. These are some of the concerns that shareholders may want to bring up at the next AGM held on 14th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. 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 Aurinia Pharmaceuticals Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Aurinia Pharmaceuticals Inc. has a market capitalization of US$769m, and reported total annual CEO compensation of US$11m for the year to December 2023. Notably, that's an increase of 20% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$823k.

On examining similar-sized companies in the American Biotechs industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$4.1m. Hence, we can conclude that Peter Greenleaf is remunerated higher than the industry median. What's more, Peter Greenleaf holds US$1.7m worth of shares in the company in their own name.

On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. It's interesting to note that Aurinia Pharmaceuticals allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Aurinia Pharmaceuticals Inc.'s Growth

Over the past three years, Aurinia Pharmaceuticals Inc. has seen its earnings per share (EPS) grow by 34% per year. It achieved revenue growth of 30% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Aurinia Pharmaceuticals Inc. Been A Good Investment?

Few Aurinia Pharmaceuticals Inc. shareholders would feel satisfied with the return of -59% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Aurinia Pharmaceuticals that investors should be aware of in a dynamic business environment.

Important note: Aurinia 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.