In the past three years, shareholders of Jounce Therapeutics, Inc. (NASDAQ:JNCE) have seen a loss on their investment. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 18 June 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Jounce Therapeutics

Comparing Jounce Therapeutics, Inc.'s CEO Compensation With the industry

According to our data, Jounce Therapeutics, Inc. has a market capitalization of US$362m, and paid its CEO total annual compensation worth US$2.0m over the year to December 2020. Notably, that's an increase of 36% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$565k.

On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$2.3m. This suggests that Jounce Therapeutics remunerates its CEO largely in line with the industry average. What's more, Rich Murray holds US$647k worth of shares in the company in their own name.

On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. Jounce Therapeutics is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Jounce Therapeutics, Inc.'s Growth

Over the past three years, Jounce Therapeutics, Inc. has seen its earnings per share (EPS) grow by 1.4% per year. Its revenue is down 53% over the previous year.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Jounce Therapeutics, Inc. Been A Good Investment?

Since shareholders would have lost about 11% over three years, some Jounce Therapeutics, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Jounce Therapeutics you should be aware of, and 1 of them is a bit concerning.

Important note: Jounce Therapeutics 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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