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

It would be hard to discount the role that CEO Søren Nielsen has played in delivering the impressive results at Demant A/S (CPH:DEMANT) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 10 March 2022. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

Check out our latest analysis for Demant

How Does Total Compensation For Søren Nielsen Compare With Other Companies In The Industry?

Our data indicates that Demant A/S has a market capitalization of kr.62b, and total annual CEO compensation was reported as kr.17m for the year to December 2021. Notably, that's an increase of 12% over the year before. We note that the salary portion, which stands at kr.12.9m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from kr.27b to kr.81b, we found that the median CEO total compensation was kr.17m. This suggests that Demant remunerates its CEO largely in line with the industry average. Furthermore, Søren Nielsen directly owns kr.7.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	kr.13m	kr.12m	78%
Other	kr.3.7m	kr.2.9m	22%
Total Compensation	kr.17m	kr.15m	100%

Speaking on an industry level, nearly 52% of total compensation represents salary, while the remainder of 48% is other remuneration. According to our research, Demant has allocated a higher percentage of pay to salary in comparison to the wider 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.

A Look at Demant A/S' Growth Numbers

Over the past three years, Demant A/S has seen its earnings per share (EPS) grow by 14% per year. Its revenue is up 27% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Demant A/S Been A Good Investment?

Boasting a total shareholder return of 37% over three years, Demant A/S has done well by shareholders. 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.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Demant that investors should be aware of in a dynamic business environment.

Important note: Demant 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.