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How Should Investors React To Eurofins Scientific SE's (EPA:ERF) CEO Pay?

Simply Wall St

Gilles Martin is the CEO of Eurofins Scientific SE (EPA:ERF). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Eurofins Scientific

How Does Gilles Martin's Compensation Compare With Similar Sized Companies?

Our data indicates that Eurofins Scientific SE is worth €8.2b, and total annual CEO compensation was reported as €1.2m for the year to December 2018. It is worth noting that the CEO compensation consists almost entirely of the salary, worth €1.2m. When we examined a selection of companies with market caps ranging from €3.6b to €11b, we found the median CEO total compensation was €2.3m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

The graphic below shows how CEO compensation at Eurofins Scientific has changed from year to year.

ENXTPA:ERF CEO Compensation, October 14th 2019

Is Eurofins Scientific SE Growing?

On average over the last three years, Eurofins Scientific SE has grown earnings per share (EPS) by 12% each year (using a line of best fit). Its revenue is up 27% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Eurofins Scientific SE Been A Good Investment?

With a total shareholder return of 11% over three years, Eurofins Scientific SE shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Eurofins Scientific SE is currently paying its CEO below what is normal for companies of its size.

Since the business is growing, many would argue this suggests the pay is modest. While returns over the last few years haven't been top notch, there is nothing to suggest to us that Gilles Martin is overcompensated. It's great to see a company that pays its CEO reasonably, even while growing. But it would be nice if insiders were also buying shares. Shareholders may want to check for free if Eurofins Scientific insiders are buying or selling shares.

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.

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.