Lars Jørgensen became the CEO of Novo Nordisk A/S (CPH:NOVO B) in 2017. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Lars Jørgensen’s Compensation Compare With Similar Sized Companies?
Our data indicates that Novo Nordisk A/S is worth ø930b, and total annual CEO compensation was reported as ø55m for the year to December 2019. That’s a notable increase of 33% on last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at ø14m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a group of companies with market caps over ø54b, we found that their median CEO total compensation was ø21m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
It would therefore appear that Novo Nordisk A/S pays Lars Jørgensen more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Novo Nordisk, below.
Is Novo Nordisk A/S Growing?
On average over the last three years, Novo Nordisk A/S has grown earnings per share (EPS) by 2.3% each year (using a line of best fit). Its revenue is up 9.1% over last year.
I would argue that the improvement in revenue isn’t particularly impressive, but the modest improvement in EPS is good. Considering these factors I’d say performance has been pretty decent, though not amazing. Shareholders might be interested in this free visualization of analyst forecasts.
Has Novo Nordisk A/S Been A Good Investment?
Boasting a total shareholder return of 76% over three years, Novo Nordisk A/S has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
We examined the amount Novo Nordisk A/S pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that group.
While we generally prefer to see stronger EPS growth, there’s no arguing with the strong returns to shareholders, over the last three years. Considering this fine result for investors, we daresay the CEO compensation might be apt. So you may want to check if insiders are buying Novo Nordisk shares with their own money (free access).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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