Shareholders Would Not Be Objecting To Danske Bank A/S' (CPH:DANSKE) CEO Compensation And Here's Why

Key Insights

• Danske Bank will host its Annual General Meeting on 21st of March
• CEO Carsten Egeriis' total compensation includes salary of kr.14.5m
• Total compensation is similar to the industry average
• Danske Bank's total shareholder return over the past three years was 79% while its EPS grew by 74% over the past three years

The performance at Danske Bank A/S (CPH:DANSKE) has been quite strong recently and CEO Carsten Egeriis has played a role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 21st of March. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

Check out our latest analysis for Danske Bank

Comparing Danske Bank A/S' CEO Compensation With The Industry

Our data indicates that Danske Bank A/S has a market capitalization of kr.177b, and total annual CEO compensation was reported as kr.20m for the year to December 2023. We note that's an increase of 13% above last year. We note that the salary portion, which stands at kr.14.5m constitutes the majority of total compensation received by the CEO.

On comparing similar companies in the Danish Banks industry with market capitalizations above kr.55b, we found that the median total CEO compensation was kr.20m. From this we gather that Carsten Egeriis is paid around the median for CEOs in the industry. Furthermore, Carsten Egeriis directly owns kr.6.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	kr.15m	kr.14m	73%
Other	kr.5.5m	kr.3.7m	27%
Total Compensation	kr.20m	kr.18m	100%

On an industry level, roughly 83% of total compensation represents salary and 17% is other remuneration. In Danske Bank's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Danske Bank A/S' Growth

Over the past three years, Danske Bank A/S has seen its earnings per share (EPS) grow by 74% per year. It achieved revenue growth of 26% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Danske Bank A/S Been A Good Investment?

We think that the total shareholder return of 79%, over three years, would leave most Danske Bank A/S shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Given the improved performance, shareholders may be more forgiving of CEO compensation in the upcoming AGM. However, despite the strong growth in earnings and share price growth, the focus for shareholders would be how the company plans to steer the company towards sustainable profitability in the near 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 identified 2 warning signs for Danske Bank (1 is significant!) that you should be aware of before investing here.

Important note: Danske Bank 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.

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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.