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How Should Investors React To Crédit Agricole S.A.'s (EPA:ACA) CEO Pay?

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Philippe Brassac became the CEO of Crédit Agricole S.A. (EPA:ACA) in 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. 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. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Crédit Agricole

How Does Philippe Brassac's Compensation Compare With Similar Sized Companies?

According to our data, Crédit Agricole S.A. has a market capitalization of €19b, and paid its CEO total annual compensation worth €2.4m over the year to December 2019. That's a fairly small increase of 6.4% on year before. While we always look at total compensation first, we note that the salary component is less, at €1.1m. When we examined a group of companies with market caps over €7.4b, we found that their median CEO total compensation was €3.8m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. Our data reveals that Crédit Agricole allocates salary in line with the wider market.

This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business. The graphic below shows how CEO compensation at Crédit Agricole has changed from year to year.

ENXTPA:ACA CEO Compensation April 27th 2020
ENXTPA:ACA CEO Compensation April 27th 2020

Is Crédit Agricole S.A. Growing?

On average over the last three years, Crédit Agricole S.A. has seen earnings per share (EPS) move in a favourable direction by 19% each year (using a line of best fit). In the last year, its revenue is up 1.1%.

This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. You might want to check this free visual report on analyst forecasts for future earnings.

Has Crédit Agricole S.A. Been A Good Investment?

With a three year total loss of 44%, Crédit Agricole S.A. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Crédit Agricole S.A. is currently paying its CEO below what is normal for large companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. We're not critical of the remuneration Philippe Brassac receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. CEO compensation is an important area to keep your eyes on, but we've also identified 3 warning signs for Crédit Agricole (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

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

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.