Is Indra Sistemas, S.A. (BME:IDR) Excessively Paying Its CEO?
Fernando Abril-Martorell Hernández became the CEO of Indra Sistemas, S.A. (BME:IDR) in 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for Indra Sistemas
How Does Fernando Abril-Martorell Hernández's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Indra Sistemas, S.A. has a market cap of €1.9b, and reported total annual CEO compensation of €2.1m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at €775k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from €906m to €2.9b, and discovered that the median CEO total compensation of that group was €1.1m.
It would therefore appear that Indra Sistemas, S.A. pays Fernando Abril-Martorell Hernández more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Indra Sistemas has changed from year to year.
Is Indra Sistemas, S.A. Growing?
On average over the last three years, Indra Sistemas, S.A. has grown earnings per share (EPS) by 31% each year (using a line of best fit). It achieved revenue growth of 5.6% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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?
Indra Sistemas, S.A. has not done too badly by shareholders, with a total return of 1.7%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
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. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. We also think investors are doing ok, over the same time period. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't call the CEO pay problematic. So you may want to check if insiders are buying Indra Sistemas shares with their own money (free access).
Important note: Indra Sistemas may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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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