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In 2008 Severin Schwan was appointed CEO of Roche Holding AG (VTX:ROG). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we’ll look at a snap shot of the business growth. 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 Severin Schwan’s Compensation Compare With Similar Sized Companies?
According to our data, Roche Holding AG has a market capitalization of CHF229b, and pays its CEO total annual compensation worth CHF12m. (This number is for the twelve months until 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CHF4.0m. When we examined a group of companies with market caps over CHF8.0b, we found that their median CEO compensation was CHF4.9m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
As you can see, Severin Schwan is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Roche Holding AG is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Roche Holding has changed over time.
Is Roche Holding AG Growing?
On average over the last three years, Roche Holding AG has grown earnings per share (EPS) by 4.8% each year (using a line of best fit). Its revenue is up 6.7% over last year.
I’d prefer higher revenue growth, but I’m happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Shareholders might be interested in this free visualization of analyst forecasts.
Has Roche Holding AG Been A Good Investment?
Roche Holding AG has generated a total shareholder return of 22% over three years, so most shareholders would be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
We compared the total CEO remuneration paid by Roche Holding AG, and compared it to remuneration at a group of other large companies. As discussed above, we discovered that the company pays more than the median of that group.
Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. Considering this, we wouldn’t want to see any big pay rises, although we’d stop short of calling the CEO compensation unfair. Whatever your view on compensation, you might want to check if insiders are buying or selling Roche Holding shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.