In the past three years, the share price of Teva Pharmaceutical Industries Limited (NYSE:TEVA) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 14 June 2021. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
Comparing Teva Pharmaceutical Industries Limited's CEO Compensation With the industry
Our data indicates that Teva Pharmaceutical Industries Limited has a market capitalization of US$12b, and total annual CEO compensation was reported as US$16m for the year to December 2020. That's a notable increase of 36% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$2.0m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$16m. So it looks like Teva Pharmaceutical Industries compensates Kare Schultz in line with the median for the industry. Moreover, Kare Schultz also holds US$9.3m worth of Teva Pharmaceutical Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 28% of total compensation out of all the companies we analyzed, while other remuneration made up 72% of the pie. Teva Pharmaceutical Industries 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.
Teva Pharmaceutical Industries Limited's Growth
Over the past three years, Teva Pharmaceutical Industries Limited has seen its earnings per share (EPS) grow by 68% per year. It saw its revenue drop 4.7% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Teva Pharmaceutical Industries Limited Been A Good Investment?
Few Teva Pharmaceutical Industries Limited shareholders would feel satisfied with the return of -54% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
Shareholders may want to check for free if Teva Pharmaceutical Industries insiders are buying or selling shares.
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.
When trading Teva Pharmaceutical Industries or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.