Shareholders Will Probably Not Have Any Issues With Topdanmark A/S' (CPH:TOP) CEO Compensation

Key Insights

• Topdanmark will host its Annual General Meeting on 23rd of April
• CEO Peter Hermann's total compensation includes salary of kr.8.28m
• The total compensation is similar to the average for the industry
• Topdanmark's total shareholder return over the past three years was 21% while its EPS was down 2.8% over the past three years

Despite positive share price growth of 21% for Topdanmark A/S (CPH:TOP) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 23rd of April. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Topdanmark

How Does Total Compensation For Peter Hermann Compare With Other Companies In The Industry?

At the time of writing, our data shows that Topdanmark A/S has a market capitalization of kr.26b, and reported total annual CEO compensation of kr.10m for the year to December 2023. We note that's a decrease of 23% compared to last year. In particular, the salary of kr.8.28m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Denmark Insurance industry with market capitalizations ranging from kr.14b to kr.45b, the reported median CEO total compensation was kr.12m. So it looks like Topdanmark compensates Peter Hermann in line with the median for the industry. Furthermore, Peter Hermann directly owns kr.2.5m worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	kr.8.3m	kr.9.7m	83%
Other	kr.1.7m	kr.3.3m	17%
Total Compensation	kr.10m	kr.13m	100%

Speaking on an industry level, nearly 41% of total compensation represents salary, while the remainder of 59% is other remuneration. According to our research, Topdanmark has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Topdanmark A/S' Growth

Topdanmark A/S has reduced its earnings per share by 2.8% a year over the last three years. Its revenue is up 8.2% over the last year.

Its a bit disappointing to see that the company has failed to grow its EPS. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Topdanmark A/S Been A Good Investment?

With a total shareholder return of 21% over three years, Topdanmark A/S shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Topdanmark that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.