Is NovoCure Limited's (NASDAQ:NVCR) CEO Overpaid Relative To Its Peers?

Simply Wall St

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In 2002 Asaf Danziger was appointed CEO of NovoCure Limited (NASDAQ:NVCR). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for NovoCure

How Does Asaf Danziger's Compensation Compare With Similar Sized Companies?

Our data indicates that NovoCure Limited is worth US$5.2b, and total annual CEO compensation is US$4.6m. (This number is for the twelve months until December 2018). That's just a smallish increase of 6.0% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$693k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.9m.

Most shareholders would consider it a positive that Asaf Danziger takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at NovoCure has changed from year to year.

NasdaqGS:NVCR CEO Compensation, June 12th 2019

Is NovoCure Limited Growing?

Over the last three years NovoCure Limited has grown its earnings per share (EPS) by an average of 51% per year (using a line of best fit). Its revenue is up 39% over last year.

This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Shareholders might be interested in this free visualization of analyst forecasts.

Has NovoCure Limited Been A Good Investment?

Most shareholders would probably be pleased with NovoCure Limited for providing a total return of 405% over three years. 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.

In Summary...

NovoCure Limited is currently paying its CEO below what is normal for companies of its size. Considering the underlying business is growing earnings, this would suggest the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Asaf Danziger deserves a raise!

It's not often we see shareholders do so well, and yet the CEO is paid modestly. But it is even better if company insiders are also buying shares with their own money. Whatever your view on compensation, you might want to check if insiders are buying or selling NovoCure shares (free trial).

If you want to buy a stock that is better than NovoCure, this free list of high return, low debt companies is a great place to look.

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 editorial-team@simplywallst.com. 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.