Biotech pay up despite losses

Western Australia’s three biggest biotech stocks – pSivida, Chemeq and Imugene – have disclosed some of the most interesting remuneration practices in the local market.

These companies have no sales revenue, let alone profits, yet their top executives are among the best paid people in Perth.

pSivida managing director Gavin Rezos earned total remuneration of $1.08 million last year, Chemeq managing director Graham Melrose lifted his total income by 50 per cent to $614,796, and Imugene executive chairman Graham Dowland increased his remuneration to $541,019.

Looking behind the headline numbers, Dr Melrose received by far the highest ‘fixed’ income ($591,860), supplemented by a cash bonus of $22,936. Chemeq did not seek to explain Dr Melrose’s higher salary or bonus, which is surprising given the company’s chequered progress.

The 2003-04 financial year was characterised by construction delays at its manufacturing plant, regulatory approval delays and a sliding share price.

Chemeq has encountered even bigger commercial and financial setbacks since June 30, so it will be interesting to observe future changes in Dr Melrose’s remuneration.

In contrast, nanotechnology company pSivida is on the up and up, achieving a number of R&D milestones last year and enjoying a three-fold jump in its share price.

It now has a similar market capitalisation to Chemeq, yet Mr Rezos’ fixed income ($391,201) is substantially lower than that of Dr Melrose and, the company says, about half the prevailing levels in the UK where its operations are based.

Mr Rezos received a bonus of $250,000, primarily for his role in managing international capital raisings worth $27.5 million, partly at a premium to the market price.

The big kicker for Mr Rezos was the granting of share options worth $435,600.

The options are exercisable at 61 cents, which was a 5 per cent premium to the share price when they were issued but is about half the current share price.

Imugene said it conducted a review of its executive directors’ salaries and found they were in the lowest 25 per cent for the biotechnology industry.

In response, the company introduced a cash bonus scheme worth up to $200,000 a year to “supplement” the fixed salary.

In addition, Mr Dowland gained a 39 per cent increase in his fixed salary to $175,000.

Like Mr Rezos, Mr Dowland also received a big boost from the granting of share options, worth $266,019.