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How Is Edwards Lifesciences' (NYSE:EW) CEO Compensated?

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·4 min read
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Mike Mussallem became the CEO of Edwards Lifesciences Corporation (NYSE:EW) in 2000, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Edwards Lifesciences pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Edwards Lifesciences

How Does Total Compensation For Mike Mussallem Compare With Other Companies In The Industry?

At the time of writing, our data shows that Edwards Lifesciences Corporation has a market capitalization of US$48b, and reported total annual CEO compensation of US$12m for the year to December 2019. That's just a smallish increase of 6.3% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$10.0m. So it looks like Edwards Lifesciences compensates Mike Mussallem in line with the median for the industry. Moreover, Mike Mussallem also holds US$247m worth of Edwards Lifesciences stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2019

2018

Proportion (2019)

Salary

US$1.1m

US$1.0m

9%

Other

US$10m

US$9.8m

91%

Total Compensation

US$12m

US$11m

100%

On an industry level, roughly 21% of total compensation represents salary and 79% is other remuneration. Edwards Lifesciences pays a modest slice of remuneration through salary, as compared 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
ceo-compensation

A Look at Edwards Lifesciences Corporation's Growth Numbers

Edwards Lifesciences Corporation's earnings per share (EPS) grew 1.9% per year over the last three years. In the last year, its revenue is up 9.0%.

We're 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Edwards Lifesciences Corporation Been A Good Investment?

Boasting a total shareholder return of 99% over three years, Edwards Lifesciences Corporation 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...

As we noted earlier, Edwards Lifesciences pays its CEO in line with similar-sized companies belonging to the same industry. But the company has been found wanting in terms of earnings growth over the past three years. On the other hand, shareholder returns over the same period have been very healthy. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer to see improved performance, before a bump in pay.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Edwards Lifesciences that you should be aware of before investing.

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.

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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