Harold C. Goddijn has been the CEO of TomTom N.V. (AMS:TOM2) since 2001. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Harold C. Goddijn's Compensation Compare With Similar Sized Companies?
According to our data, TomTom N.V. has a market capitalization of €1.4b, and paid its CEO total annual compensation worth €1.6m over the year to December 2019. That's below the compensation, last year. While we always look at total compensation first, we note that the salary component is less, at €474k. 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 from €927m to €3.0b, and the median CEO total compensation was €1.6m.
So Harold C. Goddijn receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at TomTom has changed from year to year.
Is TomTom N.V. Growing?
TomTom N.V. has reduced its earnings per share by an average of 1.5% a year, over the last three years (measured with a line of best fit). Its revenue is up 2.0% over last year.
The lack of earnings per share growth in the last three years is unimpressive. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.
Has TomTom N.V. Been A Good Investment?
TomTom N.V. has generated a total shareholder return of 30% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
Remuneration for Harold C. Goddijn is close enough to the median pay for a CEO of a similar sized company .
We're not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We're not saying the CEO pay is too generous, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. Whatever your view on compensation, you might want to check if insiders are buying or selling TomTom shares (free trial).
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.
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