In 2017 Lars Jørgensen was appointed CEO of Novo Nordisk A/S (CPH:NOVO B). First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Lars Jørgensen's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Novo Nordisk A/S has a market cap of ø898b, and reported total annual CEO compensation of ø41m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at ø11m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations over ø54b, and calculated the median CEO total compensation to be ø19m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Thus we can conclude that Lars Jørgensen receives more in total compensation than the median of a group of large companies in the same market as Novo Nordisk A/S. However, this doesn't necessarily mean the pay 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 Novo Nordisk has changed over time.
Is Novo Nordisk A/S Growing?
Novo Nordisk A/S has increased its earnings per share (EPS) by an average of 2.4% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 8.4%.
I'm not particularly impressed by the revenue growth, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. You might want to check this free visual report on analyst forecasts for future earnings.
Has Novo Nordisk A/S Been A Good Investment?
Boasting a total shareholder return of 72% over three years, Novo Nordisk A/S 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.
We compared the total CEO remuneration paid by Novo Nordisk A/S, and compared it to remuneration at a group of other large companies. As discussed above, we discovered that the company pays more than the median of that group.
One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. So, considering these tasty returns, the CEO compensation may be quite appropriate. So you may want to check if insiders are buying Novo Nordisk shares with their own money (free access).
If you want to buy a stock that is better than Novo Nordisk, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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