Pascal Soriot has been the CEO of AstraZeneca PLC (LON:AZN) since 2012. This analysis aims first to contrast CEO compensation with other large companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Pascal Soriot's Compensation Compare With Similar Sized Companies?
According to our data, AstraZeneca PLC has a market capitalization of UK£96b, and paid its CEO total annual compensation worth US$11m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.3m. 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 looked at a group of companies with market capitalizations over UK£6.1b and the median CEO total compensation was UK£3.6m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
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 a visual representation of the CEO compensation at AstraZeneca, below.
Is AstraZeneca PLC Growing?
Over the last three years AstraZeneca PLC has shrunk its earnings per share by an average of 17% per year (measured with a line of best fit). In the last year, its revenue is up 13%.
Sadly for shareholders, earnings per share are actually down, over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.
Has AstraZeneca PLC Been A Good Investment?
Most shareholders would probably be pleased with AstraZeneca PLC for providing a total return of 91% over three years. 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 total CEO remuneration at AstraZeneca PLC with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. But clearly there are some positives, because investors have done well over the same time frame. Considering this, shareholders are probably not too worried about the CEO compensation. Shareholders may want to check for free if AstraZeneca 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.
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