U.S. Markets closed

Is Galapagos NV's (AMS:GLPG) CEO Pay Justified?

Simply Wall St

Onno van de Stolpe became the CEO of Galapagos NV (AMS:GLPG) in 1999. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Galapagos

How Does Onno van de Stolpe's Compensation Compare With Similar Sized Companies?

According to our data, Galapagos NV has a market capitalization of €11b, and paid its CEO total annual compensation worth €1.5m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at €481k. 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 €7.3b, and calculated the median CEO total compensation to be €3.5m. (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).

A first glance this seems like a real positive for shareholders, since Onno van de Stolpe is paid less than the average total compensation paid by other large companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.

The graphic below shows how CEO compensation at Galapagos has changed from year to year.

ENXTAM:GLPG CEO Compensation, November 13th 2019

Is Galapagos NV Growing?

On average over the last three years, Galapagos NV has grown earnings per share (EPS) by 29% each year (using a line of best fit). Its revenue is up 240% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. It could be important to check this free visual depiction of what analysts expect for the future.

Has Galapagos NV Been A Good Investment?

Most shareholders would probably be pleased with Galapagos NV for providing a total return of 216% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Galapagos NV is currently paying its CEO below what is normal for large companies.

Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Onno van de Stolpe deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. The cherry on top would be if company insiders are buying shares with their own money. Whatever your view on compensation, you might want to check if insiders are buying or selling Galapagos shares (free trial).

If you want to buy a stock that is better than Galapagos, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.