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How Should Investors React To Banco de Sabadell, S.A.'s (BME:SAB) CEO Pay?

Simply Wall St

Jaime Guardiola Romojaro has been the CEO of Banco de Sabadell, S.A. (BME:SAB) since 2007. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Banco de Sabadell

How Does Jaime Guardiola Romojaro's Compensation Compare With Similar Sized Companies?

Our data indicates that Banco de Sabadell, S.A. is worth €5.5b, and total annual CEO compensation was reported as €100k for the year to December 2018. It is worth noting that the CEO compensation consists almost entirely of the salary, worth €100k. We examined companies with market caps from €3.6b to €11b, and discovered that the median CEO total compensation of that group was €863k.

A first glance this seems like a real positive for shareholders, since Jaime Guardiola Romojaro is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at Banco de Sabadell has changed from year to year.

BME:SAB CEO Compensation, January 21st 2020

Is Banco de Sabadell, S.A. Growing?

Banco de Sabadell, S.A. has reduced its earnings per share by an average of 15% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 5.7%.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Banco de Sabadell, S.A. Been A Good Investment?

Since shareholders would have lost about 18% over three years, some Banco de Sabadell, 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...

It looks like Banco de Sabadell, S.A. pays its CEO less than similar sized companies.

The compensation paid to Jaime Guardiola Romojaro is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Banco de Sabadell.

Important note: Banco de Sabadell 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.

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. Thank you for reading.