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Pascal Soriot has been the CEO of AstraZeneca PLC (LON:AZN) since 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Pascal Soriot's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that AstraZeneca PLC has a market cap of UK£84b, and is paying total annual CEO compensation of US$9.4m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. We took a group of companies with market capitalizations over UK£6.3b, and calculated the median CEO total compensation to be UK£3.9m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
It would therefore appear that AstraZeneca PLC pays Pascal Soriot more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at AstraZeneca has changed from year to year.
Is AstraZeneca PLC Growing?
AstraZeneca PLC has reduced its earnings per share by an average of 6.3% a year, over the last three years (measured with a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
Sadly for shareholders, earnings per share are actually down, over three years. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has AstraZeneca PLC Been A Good Investment?
I think that the total shareholder return of 62%, over three years, would leave most AstraZeneca PLC shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at AstraZeneca PLC with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
However, we can't argue with the strong returns to shareholders, over the same time period. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling AstraZeneca 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.
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 firstname.lastname@example.org. 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.