Here’s why Velan Inc.’s (TSE: VLN) CEO compensation is the least of shareholder concerns

Shareholders may be wondering what CEO Yves Leduc intends to do to improve the less than excellent performance of Velan inc. (TSE: VLN) recently. They will have the opportunity to exercise their voting rights to influence the future direction of the company at the next AGM on July 13, 2021. Setting an appropriate compensation for executives to align with the interests of shareholders can also be a challenge. way to influence the performance of the company in the long term. In our opinion, the CEO’s compensation does not seem excessive and we discuss why.

See our latest review for Velan

Velan Inc. CEO Compensation Comparison with Industry

At the time of writing, our data shows that Velan Inc. has a market capitalization of C $ 220 million and reported total annual CEO compensation of US $ 579,000 for the year through February 2021. This is a modest increase of 4.6% from the previous year. In particular, the salary, which amounts to US $ 417.7k, represents the major part of the total compensation paid.

Looking at similar-sized companies in the industry with market capitalizations between C $ 125 million and C $ 499 million, we found that the median total compensation of CEOs in this group was US $ 845,000. In other words, Velan pays its CEO less than the industry median. In addition, Yves Leduc directly owns CA $ 408k in company shares.

Component 2021 2020 Proportion (2021)
Salary US $ 418,000 US $ 436,000 72%
Other US $ 161,000 $ 117,000 28%
Total compensation US $ 579,000 US $ 553,000 100%

At the industry level, approximately 69% of total compensation is salary and 31% other compensation. Our data shows that Velan allocates wages more or less according to the general market. If salary is the primary component of total compensation, this suggests that the CEO receives a higher fixed proportion of total compensation, regardless of performance.

TSX: VLN CEO Compensation July 7, 2021

A look at the growth numbers for Velan Inc.

Over the past three years, Velan Inc. has seen its earnings per share (EPS) increase by 27% per year. Last year, its turnover fell by 19%.

Overall, this is a positive result for shareholders, showing that the company has improved in recent years. Lack of revenue growth isn’t ideal, but it’s the bottom line that matters most in business. While we don’t have an analyst forecast for the company, shareholders might want to take a look at this detailed historical chart of earnings, income and cash flow.

Was Velan Inc. a good investment?

With a three-year total loss of 24% for shareholders, Velan Inc. would certainly have dissatisfied shareholders. Therefore, it could be upsetting for shareholders if the CEO is paid generously.

To conclude…

The loss to shareholders over the past three years is certainly cause for concern. The stock price trend diverged with robust EPS growth, however, suggesting that other factors may be driving price performance. Management and the board need to focus more on why the stock price has diverged from fundamentals. At the next AGM, shareholders will have the opportunity to discuss these concerns with the board and assess whether the board’s plan is likely to improve the performance of the company.

While paying attention to CEO compensation is important, investors should consider other parts of the business as well. This is why we have dug and identified 1 warning sign for Velan what investors should think about before committing capital to this stock.

Important note: Velan is an exciting stock, but we understand that investors can look for an unencumbered balance sheet and exceptional returns. You might find something better in this list of interesting companies with high ROE and low leverage.

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
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