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Is Banco Santander, S.A.'s (BME:SAN) CEO Being Overpaid?

Simply Wall St

The CEO of Banco Santander, S.A. (BME:SAN) is José Álvarez Álvarez. This analysis aims first to contrast CEO compensation with other large companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Banco Santander

How Does José Álvarez Álvarez's Compensation Compare With Similar Sized Companies?

According to our data, Banco Santander, S.A. has a market capitalization of €74b, and pays its CEO total annual compensation worth €9.0m. (This is based on the year to December 2018). We note that's an increase of 40% above last year. We think total compensation is more important but we note that the CEO salary is lower, at €2.5m. When we examined a group of companies with market caps over €7.1b, we found that their median CEO total compensation was €2.7m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).

It would therefore appear that Banco Santander, S.A. pays José Álvarez Álvarez 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.

You can see, below, how CEO compensation at Banco Santander has changed over time.

BME:SAN CEO Compensation, April 24th 2019

Is Banco Santander, S.A. Growing?

On average over the last three years, Banco Santander, S.A. has grown earnings per share (EPS) by 6.6% each year (using a line of best fit). Revenue was pretty flat on last year.

I generally like to see a little revenue growth, but I'm happy with the EPS growth. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. You might want to check this free visual report on analyst forecasts for future earnings.

Has Banco Santander, S.A. Been A Good Investment?

Banco Santander, S.A. has served shareholders reasonably well, with a total return of 14% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

We examined the amount Banco Santander, S.A. pays its CEO, and compared it to the amount paid by other large companies. We found that it pays well over the median amount paid in the benchmark group.

We generally prefer to see stronger EPS growth, and we're not particularly impressed with the total shareholder return, over the last three years. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Banco Santander.

If you want to buy a stock that is better than Banco Santander, 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.