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Is Ebro Foods, S.A. (BME:EBRO) Overpaying Its CEO?

Simply Wall St

The CEO of Ebro Foods, S.A. (BME:EBRO) is Antonio Hernández Callejas. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Ebro Foods

How Does Antonio Hernández Callejas's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Ebro Foods, S.A. has a market cap of €2.8b, and reported total annual CEO compensation of €2.5m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €1.0m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of €1.9b to €6.0b. The median total CEO compensation was €937k.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Ebro Foods stands. Speaking on an industry level, we can see that nearly 54% of total compensation represents salary, while the remainder of 46% is other remuneration. Our data reveals that Ebro Foods allocates salary in line with the wider market.

Thus we can conclude that Antonio Hernández Callejas receives more in total compensation than the median of a group of companies in the same market, and of similar size to Ebro Foods, S.A.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see a visual representation of the CEO compensation at Ebro Foods, below.

BME:EBRO CEO Compensation, March 21st 2020

Is Ebro Foods, S.A. Growing?

On average over the last three years, Ebro Foods, S.A. has shrunk earnings per share by 12% each year (measured with a line of best fit). Its revenue is up 6.3% over last year.

Unfortunately, earnings per share have trended lower over the last three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has Ebro Foods, S.A. Been A Good Investment?

With a total shareholder return of 0.2% over three years, Ebro Foods, S.A. has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We compared total CEO remuneration at Ebro Foods, S.A. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us. While shareholder returns are acceptable, they don't delight. So we doubt many shareholders would consider the CEO pay to be particularly modest! On another note, we've spotted 1 warning sign for Ebro Foods that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.

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