How Should Investors React To Pernod Ricard SA's (EPA:RI) CEO Pay?
Alexandre Ricard has been the CEO of Pernod Ricard SA (EPA:RI) since 2015. First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. 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.
See our latest analysis for Pernod Ricard
How Does Alexandre Ricard's Compensation Compare With Similar Sized Companies?
According to our data, Pernod Ricard SA has a market capitalization of €43b, and paid its CEO total annual compensation worth €4.8m over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at €1.1m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations over €7.2b and the median CEO total compensation was €3.2m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
It would therefore appear that Pernod Ricard SA pays Alexandre Ricard more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration 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 a visual representation of the CEO compensation at Pernod Ricard, below.
Is Pernod Ricard SA Growing?
Pernod Ricard SA has increased its earnings per share (EPS) by an average of 6.3% a year, over the last three years (using a line of best fit). Its revenue is up 5.3% over last year.
I'd prefer higher revenue growth, but I'm happy with the modest EPS growth. Considering these factors I'd say performance has been pretty decent, though not amazing. Shareholders might be interested in this free visualization of analyst forecasts.
Has Pernod Ricard SA Been A Good Investment?
Boasting a total shareholder return of 62% over three years, Pernod Ricard SA has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
We compared the total CEO remuneration paid by Pernod Ricard SA, and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.
One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Pernod Ricard (free visualization of insider trades).
Important note: Pernod Ricard 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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