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Is AstraZeneca PLC (LON:AZN) Excessively Paying Its CEO?

Pascal Soriot became the CEO of AstraZeneca PLC (LON:AZN) in 2012. First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for AstraZeneca

How Does Pascal Soriot’s Compensation Compare With Similar Sized Companies?

Our data indicates that AstraZeneca PLC is worth UK£79b, and total annual CEO compensation is US$9.4m. That’s less than last year. We took a group of companies with market capitalizations over UK£6.1b, and calculated the median CEO compensation to be UK£3.9m.

It would therefore appear that AstraZeneca PLC pays Pascal Soriot more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at AstraZeneca has changed over time.

LSE:AZN CEO Compensation November 16th 18
LSE:AZN CEO Compensation November 16th 18

Is AstraZeneca PLC Growing?

Over the last three years AstraZeneca PLC has grown its earnings per share (EPS) by an average of 6.1% per year. It saw its revenue drop -3.7% over the last year.

I would prefer it if there was revenue growth, but I’m happy with the EPS growth. In conclusion we can’t form a strong opinion about business performance yet; but it’s one worth watching.

You might want to check this free visual report on analyst forecasts for future earnings.

Has AstraZeneca PLC Been A Good Investment?

Most shareholders would probably be pleased with AstraZeneca PLC for providing a total return of 76% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

We examined the amount AstraZeneca PLC pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.

While we generally prefer to see stronger EPS growth, there’s no arguing with the strong returns to shareholders, over the last three years. Considering this fine result for investors, we daresay the CEO compensation might be apt. So you may want to check if insiders are buying AstraZeneca PLC shares with their own money (free access).

Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.