The Compensation For NovoCure Limited's (NASDAQ:NVCR) CEO Looks Deserved And Here's Why

Simply Wall St
June 01, 2021
Source: Shutterstock

The performance at NovoCure Limited (NASDAQ:NVCR) has been quite strong recently and CEO Asaf Danziger has played a role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 09 June 2021. 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.

Check out our latest analysis for NovoCure

Comparing NovoCure Limited's CEO Compensation With the industry

Our data indicates that NovoCure Limited has a market capitalization of US$21b, and total annual CEO compensation was reported as US$9.0m for the year to December 2020. That's a notable increase of 22% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$782k.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$10m. So it looks like NovoCure compensates Asaf Danziger in line with the median for the industry.

Component20202019Proportion (2020)
Salary US$782k US$702k 9%
Other US$8.2m US$6.6m 91%
Total CompensationUS$9.0m US$7.3m100%

On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. NovoCure pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NasdaqGS:NVCR CEO Compensation June 2nd 2021

NovoCure Limited's Growth

NovoCure Limited has seen its earnings per share (EPS) increase by 100% a year over the past three years. In the last year, its revenue is up 39%.

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. 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 NovoCure Limited Been A Good Investment?

We think that the total shareholder return of 540%, over three years, would leave most NovoCure Limited shareholders smiling. 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...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 4 warning signs for NovoCure (1 is potentially serious!) that you should be aware of before investing here.

Important note: NovoCure 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.

If you decide to trade NovoCure, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.