Key Insights

• Puma Biotechnology to hold its Annual General Meeting on 18th of June
• Total pay for CEO Alan Auerbach includes US$877.9k salary
• Total compensation is similar to the industry average
• Over the past three years, Puma Biotechnology's EPS grew by 98% and over the past three years, the total loss to shareholders 67%

In the past three years, the share price of Puma Biotechnology, Inc. (NASDAQ:PBYI) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 18th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Comparing Puma Biotechnology, Inc.'s CEO Compensation With The Industry

According to our data, Puma Biotechnology, Inc. has a market capitalization of US$168m, and paid its CEO total annual compensation worth US$2.9m over the year to December 2023. We note that's an increase of 16% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$878k.

On examining similar-sized companies in the American Biotechs industry with market capitalizations between US$100m and US$400m, we discovered that the median CEO total compensation of that group was US$2.6m. So it looks like Puma Biotechnology compensates Alan Auerbach in line with the median for the industry. What's more, Alan Auerbach holds US$24m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. Puma Biotechnology pays out 30% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Puma Biotechnology, Inc.'s Growth Numbers

Puma Biotechnology, Inc. has seen its earnings per share (EPS) increase by 98% a year over the past three years. In the last year, its revenue is down 3.6%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Puma Biotechnology, Inc. Been A Good Investment?

With a total shareholder return of -67% over three years, Puma Biotechnology, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. 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. 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which makes us a bit uncomfortable) in Puma Biotechnology we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.