We Take A Look At Why Topdanmark A/S' (CPH:TOP) CEO Compensation Is Well Earned

By
Simply Wall St
Published
March 18, 2022
CPSE:TOP
Source: Shutterstock

We have been pretty impressed with the performance at Topdanmark A/S (CPH:TOP) recently and CEO Peter Hermann deserves a mention for their role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 24 March 2022. 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. Here is our take on why we think CEO compensation is not extravagant.

View our latest analysis for Topdanmark

Comparing Topdanmark A/S' CEO Compensation With the industry

According to our data, Topdanmark A/S has a market capitalization of kr.35b, and paid its CEO total annual compensation worth kr.11m over the year to December 2021. That's a notable increase of 40% on last year. In particular, the salary of kr.7.30m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between kr.27b and kr.80b, we discovered that the median CEO total compensation of that group was kr.13m. This suggests that Topdanmark remunerates its CEO largely in line with the industry average. Furthermore, Peter Hermann directly owns kr.3.2m worth of shares in the company.

Component20212020Proportion (2021)
Salary kr.7.3m kr.7.3m 65%
Other kr.3.9m kr.700k 35%
Total Compensationkr.11m kr.8.0m100%

On an industry level, around 44% of total compensation represents salary and 56% is other remuneration. According to our research, Topdanmark has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
CPSE:TOP CEO Compensation March 18th 2022

Topdanmark A/S' Growth

Topdanmark A/S's earnings per share (EPS) grew 16% per year over the last three years. In the last year, its revenue is up 21%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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?

Most shareholders would probably be pleased with Topdanmark A/S for providing a total return of 36% over three years. 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...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Topdanmark you should be aware of, and 1 of them makes us a bit uncomfortable.

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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