Should Shareholders Have Second Thoughts About A Pay Rise For Coloplast A/S' (CPH:COLO B) CEO This Year?

Key Insights

• Coloplast to hold its Annual General Meeting on 5th of December
• Salary of kr.12.3m is part of CEO Kristian Villumsen's total remuneration
• Total compensation is 33% below industry average
• Coloplast's three-year loss to shareholders was 10% while its EPS was down 0.3% over the past three years

The underwhelming performance at Coloplast A/S (CPH:COLO B) recently has probably not pleased shareholders. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 5th of December. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

See our latest analysis for Coloplast

How Does Total Compensation For Kristian Villumsen Compare With Other Companies In The Industry?

Our data indicates that Coloplast A/S has a market capitalization of kr.201b, and total annual CEO compensation was reported as kr.22m for the year to September 2024. That's a slight decrease of 5.6% on the prior year. We note that the salary of kr.12.3m makes up a sizeable portion of the total compensation received by the CEO.

In comparison with other companies in the Denmark Medical Equipment industry with market capitalizations over kr.57b, the reported median total CEO compensation was kr.33m. This suggests that Kristian Villumsen is paid below the industry median. Moreover, Kristian Villumsen also holds kr.90m worth of Coloplast stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	kr.12m	kr.12m	56%
Other	kr.9.7m	kr.11m	44%
Total Compensation	kr.22m	kr.23m	100%

Talking in terms of the industry, salary represented approximately 56% of total compensation out of all the companies we analyzed, while other remuneration made up 44% of the pie. Coloplast is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

Coloplast A/S' Growth

Coloplast A/S saw earnings per share stay pretty flat over the last three years. Its revenue is up 10% over the last year.

A lack of EPS improvement is not good to see. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Coloplast A/S Been A Good Investment?

Given the total shareholder loss of 10% over three years, many shareholders in Coloplast A/S are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Coloplast that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.