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Is Indra Sistemas, S.A.'s (BME:IDR) CEO Overpaid Relative To Its Peers?

Simply Wall St

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Fernando Abril-Martorell Hernández has been the CEO of Indra Sistemas, S.A. (BME:IDR) since 1970. 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. 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.

Check out our latest analysis for Indra Sistemas

How Does Fernando Abril-Martorell Hernández's Compensation Compare With Similar Sized Companies?

According to our data, Indra Sistemas, S.A. has a market capitalization of €1.7b, and pays its CEO total annual compensation worth €7.4m. (This is based on the year to December 2017). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €775k. When we examined a selection of companies with market caps ranging from €898m to €2.9b, we found the median CEO total compensation was €243k.

Thus we can conclude that Fernando Abril-Martorell Hernández receives more in total compensation than the median of a group of companies in the same market, and of similar size to Indra Sistemas, S.A.. However, this doesn't necessarily mean the pay is too high. 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, below, how CEO compensation at Indra Sistemas has changed over time.

BME:IDR CEO Compensation, May 31st 2019

Is Indra Sistemas, S.A. Growing?

Indra Sistemas, S.A. has increased its earnings per share (EPS) by an average of 103% a year, over the last three years (using a line of best fit). It achieved revenue growth of 2.2% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.

Has Indra Sistemas, S.A. Been A Good Investment?

Since shareholders would have lost about 5.3% over three years, some Indra Sistemas, S.A. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared the total CEO remuneration paid by Indra Sistemas, S.A., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. So you may want to check if insiders are buying Indra Sistemas shares with their own money (free access).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.