Why We Think Coloplast A/S' (CPH:COLO B) CEO Compensation Is Not Excessive At All

Performance at Coloplast A/S (CPH:COLO B) has been reasonably good and CEO Kristian Villumsen has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 02 December 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Here is our take on why we think the CEO compensation looks appropriate.

View our latest analysis for Coloplast

Comparing Coloplast A/S' CEO Compensation With the industry

According to our data, Coloplast A/S has a market capitalization of kr.233b, and paid its CEO total annual compensation worth kr.22m over the year to September 2021. We note that's an increase of 9.0% above last year. In particular, the salary of kr.11.3m, makes up a fairly large portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations over kr.53b , the reported median total CEO compensation was kr.18m. From this we gather that Kristian Villumsen is paid around the median for CEOs in the industry. What's more, Kristian Villumsen holds kr.99m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	kr.11m	kr.11m	52%
Other	kr.10m	kr.8.7m	48%
Total Compensation	kr.22m	kr.20m	100%

Talking in terms of the industry, salary represented approximately 66% of total compensation out of all the companies we analyzed, while other remuneration made up 34% of the pie. Coloplast sets aside a smaller share of compensation for salary, in comparison to the overall 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.

Coloplast A/S' Growth

Coloplast A/S's earnings per share (EPS) grew 7.8% per year over the last three years. Its revenue is up 4.8% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Coloplast A/S Been A Good Investment?

Most shareholders would probably be pleased with Coloplast A/S for providing a total return of 82% over three years. 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.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

Shareholders may want to check for free if Coloplast insiders are buying or selling shares.

Switching gears from Coloplast, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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.

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