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Is Capgemini SE's (EPA:CAP) CEO Pay Justified?

Simply Wall St

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In 2012 Paul Hermelin was appointed CEO of Capgemini SE (EPA:CAP). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Capgemini

How Does Paul Hermelin's Compensation Compare With Similar Sized Companies?

Our data indicates that Capgemini SE is worth €18b, and total annual CEO compensation is €5.0m. (This is based on the year to December 2018). That's just a smallish increase of 5.7% on last year. While we always look at total compensation first, we note that the salary component is less, at €1.5m. When we examined a group of companies with market caps over €7.0b, we found that their median CEO total compensation was €3.4m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

As you can see, Paul Hermelin is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Capgemini SE is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Capgemini, below.

ENXTPA:CAP CEO Compensation, June 30th 2019

Is Capgemini SE Growing?

On average over the last three years, Capgemini SE has shrunk earnings per share by 17% each year (measured with a line of best fit). Its revenue is up 5.4% over last year.

Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has Capgemini SE Been A Good Investment?

Boasting a total shareholder return of 48% over three years, Capgemini SE has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We compared the total CEO remuneration paid by Capgemini SE, and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

On the other hand, returns have been good, so the company is doing something right. So on this analysis we'd stop short of criticizing the level of CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Capgemini.

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