Yahoo Finance Increases to Danaher Corporation's (NYSE:DHR) CEO Compensation Might Cool off for now
Key Insights
Danaher to hold its Annual General Meeting on 7th of May
CEO Rainer Blair's total compensation includes salary of US$1.30m
The total compensation is 126% higher than the average for the industry
Over the past three years, Danaher's EPS fell by 5.3% and over the past three years, the total shareholder return was 9.9%
Despite positive share price growth of 9.9% for Danaher Corporation (NYSE:DHR) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 7th of May may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.
View our latest analysis for Danaher
Comparing Danaher Corporation's CEO Compensation With The Industry
Our data indicates that Danaher Corporation has a market capitalization of US$183b, and total annual CEO compensation was reported as US$21m for the year to December 2023. That's just a smallish increase of 3.5% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.
In comparison with other companies in the American Life Sciences industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$9.3m. Accordingly, our analysis reveals that Danaher Corporation pays Rainer Blair north of the industry median. What's more, Rainer Blair holds US$29m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.3m | US$1.3m | 6% |
Other | US$20m | US$19m | 94% |
Total Compensation | US$21m | US$20m | 100% |
Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. Danaher pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Danaher Corporation's Growth
Over the last three years, Danaher Corporation has shrunk its earnings per share by 5.3% per year. In the last year, its revenue is down 4.8%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Danaher Corporation Been A Good Investment?
Danaher Corporation has generated a total shareholder return of 9.9% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.
In Summary...
Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Danaher that investors should be aware of in a dynamic business environment.
Switching gears from Danaher, 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.
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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.
