Key Insights

• Innovax Holdings will host its Annual General Meeting on 9th of August
• Total pay for CEO Calvin Poon includes HK$2.40m salary
• Total compensation is 136% above industry average
• Over the past three years, Innovax Holdings' EPS fell by 9.3% and over the past three years, the total loss to shareholders 60%

The results at Innovax Holdings Limited (HKG:2680) have been quite disappointing recently and CEO Calvin Poon bears some responsibility for this. At the upcoming AGM on 9th of August, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

How Does Total Compensation For Calvin Poon Compare With Other Companies In The Industry?

According to our data, Innovax Holdings Limited has a market capitalization of HK$120m, and paid its CEO total annual compensation worth HK$4.5m over the year to February 2024. This was the same as last year. We note that the salary of HK$2.40m makes up a sizeable portion of the total compensation received by the CEO.

For comparison, other companies in the Hong Kong Capital Markets industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.9m. Accordingly, our analysis reveals that Innovax Holdings Limited pays Calvin Poon north of the industry median.

Speaking on an industry level, nearly 84% of total compensation represents salary, while the remainder of 16% is other remuneration. Innovax Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. 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.

A Look at Innovax Holdings Limited's Growth Numbers

Innovax Holdings Limited has reduced its earnings per share by 9.3% a year over the last three years. Its revenue is down 28% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Innovax Holdings Limited Been A Good Investment?

With a total shareholder return of -60% over three years, Innovax Holdings Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 5 warning signs for Innovax Holdings (1 is concerning!) that you should be aware of before investing here.

Important note: Innovax Holdings 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.

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.

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