Yahoo Finanza Shareholders Will Most Likely Find Merck KGaA's (ETR:MRK) CEO Compensation Acceptable
Key Insights
Merck KGaA will host its Annual General Meeting on 26th of April
CEO Belen Garijo Lopez's total compensation includes salary of €1.50m
Total compensation is similar to the industry average
Over the past three years, Merck KGaA's EPS grew by 12% and over the past three years, the total shareholder return was 5.1%
Under the guidance of CEO Belen Garijo Lopez, Merck KGaA (ETR:MRK) has performed reasonably well recently. As shareholders go into the upcoming AGM on 26th of April, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. We present our case of why we think CEO compensation looks fair.
Check out our latest analysis for Merck KGaA
Comparing Merck KGaA's CEO Compensation With The Industry
At the time of writing, our data shows that Merck KGaA has a market capitalization of €63b, and reported total annual CEO compensation of €11m for the year to December 2023. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.5m.
In comparison with other companies in the German Pharmaceuticals industry with market capitalizations over €7.5b, the reported median total CEO compensation was €11m. This suggests that Merck KGaA remunerates its CEO largely in line with the industry average.
Component | 2023 | 2022 | Proportion (2023) |
Salary | €1.5m | €1.5m | 14% |
Other | €9.0m | €9.0m | 86% |
Total Compensation | €11m | €11m | 100% |
On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. Merck KGaA pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Merck KGaA's Growth
Merck KGaA has seen its earnings per share (EPS) increase by 12% a year over the past three years. It saw its revenue drop 5.6% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Merck KGaA Been A Good Investment?
Merck KGaA has generated a total shareholder return of 5.1% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.
In Summary...
Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.
So you may want to check if insiders are buying Merck KGaA shares with their own money (free access).
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
