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Is Heineken N.V. (AMS:HEIA) Overpaying Its CEO?

Simply Wall St

Jean-François M. Van Boxmeer became the CEO of Heineken N.V. (AMS:HEIA) in 2005. 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.

See our latest analysis for Heineken

How Does Jean-François M. Van Boxmeer's Compensation Compare With Similar Sized Companies?

According to our data, Heineken N.V. has a market capitalization of €56b, and paid its CEO total annual compensation worth €8.2m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at €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 €7.3b and the median CEO total compensation was €4.1m. 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 Jean-François M. Van Boxmeer receives more in total compensation than the median of a group of large companies in the same market as Heineken N.V.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Heineken, below.

ENXTAM:HEIA CEO Compensation, January 29th 2020

Is Heineken N.V. Growing?

Heineken N.V. has increased its earnings per share (EPS) by an average of 10% a year, over the last three years (using a line of best fit). It achieved revenue growth of 4.8% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.

Has Heineken N.V. Been A Good Investment?

I think that the total shareholder return of 49%, over three years, would leave most Heineken N.V. shareholders smiling. 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 Heineken N.V. pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. Shareholders may want to check for free if Heineken insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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