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We Think Shareholders Will Probably Be Generous With NovoCure Limited's (NASDAQ:NVCR) CEO Compensation

·3 min read

It would be hard to discount the role that CEO Asaf Danziger has played in delivering the impressive results at NovoCure Limited (NASDAQ:NVCR) recently. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 09 June 2021. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

Check out our latest analysis for NovoCure

Comparing NovoCure Limited's CEO Compensation With the industry

According to our data, NovoCure Limited has a market capitalization of US$21b, and paid its CEO total annual compensation worth US$9.0m over the year to December 2020. We note that's an increase of 22% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$782k.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$10m. This suggests that NovoCure remunerates its CEO largely in line with the industry average.

Component

2020

2019

Proportion (2020)

Salary

US$782k

US$702k

9%

Other

US$8.2m

US$6.6m

91%

Total Compensation

US$9.0m

US$7.3m

100%

On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. In NovoCure's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

NovoCure Limited's Growth

Over the past three years, NovoCure Limited has seen its earnings per share (EPS) grow by 100% per year. It achieved revenue growth of 39% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has NovoCure Limited Been A Good Investment?

Boasting a total shareholder return of 540% over three years, NovoCure Limited 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.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 4 warning signs for NovoCure you should be aware of, and 1 of them is a bit concerning.

Switching gears from NovoCure, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.