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The share price of Bausch Health Companies Inc. (NYSE:BHC) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. The upcoming AGM on 27 April 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
How Does Total Compensation For Joe Papa Compare With Other Companies In The Industry?
At the time of writing, our data shows that Bausch Health Companies Inc. has a market capitalization of US$10b, and reported total annual CEO compensation of US$14m for the year to December 2020. Notably, that's a decrease of 18% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.5m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$20m. So it looks like Bausch Health Companies compensates Joe Papa in line with the median for the industry. Moreover, Joe Papa also holds US$30m worth of Bausch Health Companies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 30% of total compensation out of all the companies we analyzed, while other remuneration made up 70% of the pie. Bausch Health Companies 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.
A Look at Bausch Health Companies Inc.'s Growth Numbers
Bausch Health Companies Inc. has reduced its earnings per share by 18% a year over the last three years. It saw its revenue drop 6.7% over the last year.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Bausch Health Companies Inc. Been A Good Investment?
We think that the total shareholder return of 63%, over three years, would leave most Bausch Health Companies Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Bausch Health Companies (free visualization of insider trades).
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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