We Think Some Shareholders May Hesitate To Increase IQVIA Holdings Inc.'s (NYSE:IQV) CEO Compensation

By
Simply Wall St
Published
April 07, 2021
NYSE:IQV

The share price of IQVIA Holdings Inc. (NYSE:IQV) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 14 April 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for IQVIA Holdings

How Does Total Compensation For Ari Bousbib Compare With Other Companies In The Industry?

According to our data, IQVIA Holdings Inc. has a market capitalization of US$38b, and paid its CEO total annual compensation worth US$26m over the year to December 2020. Notably, that's an increase of 16% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.6m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$7.6m. Accordingly, our analysis reveals that IQVIA Holdings Inc. pays Ari Bousbib north of the industry median. Furthermore, Ari Bousbib directly owns US$238m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$1.6m US$1.7m 6%
Other US$24m US$20m 94%
Total CompensationUS$26m US$22m100%

Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. It's interesting to note that IQVIA Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NYSE:IQV CEO Compensation April 7th 2021

IQVIA Holdings Inc.'s Growth

Over the last three years, IQVIA Holdings Inc. has shrunk its earnings per share by 37% per year. In the last year, its revenue is up 2.4%.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has IQVIA Holdings Inc. Been A Good Investment?

Boasting a total shareholder return of 111% over three years, IQVIA Holdings Inc. 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.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for IQVIA Holdings that investors should be aware of in a dynamic business environment.

Switching gears from IQVIA Holdings, 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.

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This article by Simply Wall St is general in nature. 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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