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Is Jerónimo Martins, SGPS, S.A.'s (ELI:JMT) CEO Being Overpaid?

Simply Wall St

Pedro de Castro Soares dos Santos has been the CEO of Jerónimo Martins, SGPS, S.A. (ELI:JMT) since 2010. First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Jerónimo Martins SGPS

How Does Pedro de Castro Soares dos Santos's Compensation Compare With Similar Sized Companies?

According to our data, Jerónimo Martins, SGPS, S.A. has a market capitalization of €8.9b, and pays its CEO total annual compensation worth €1.9m. (This is based on the year to December 2018). That's a notable increase of 11% on last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €630k. We looked at a group of companies with market capitalizations over €7.1b and the median CEO total compensation was €3.3m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

A first glance this seems like a real positive for shareholders, since Pedro de Castro Soares dos Santos is paid less than the average total compensation paid by other large companies. However, before we heap on the praise, we should delve deeper to understand business performance.

The graphic below shows how CEO compensation at Jerónimo Martins SGPS has changed from year to year.

ENXTLS:JMT CEO Compensation, April 18th 2019

Is Jerónimo Martins, SGPS, S.A. Growing?

Jerónimo Martins, SGPS, S.A. has reduced its earnings per share by an average of 2.1% a year, over the last three years (measured with a line of best fit). Its revenue is up 6.5% over last year.

The lack of earnings per share growth in the last three years is unimpressive. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has Jerónimo Martins, SGPS, S.A. Been A Good Investment?

With a total shareholder return of 4.5% over three years, Jerónimo Martins, SGPS, S.A. has done okay by shareholders. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

It appears that Jerónimo Martins, SGPS, S.A. remunerates its CEO below most large companies.

Shareholders should note that compensation for Pedro de Castro Soares dos Santos is under the median of a group of large companies. However, the earnings per share are not moving in the right direction, and the returns to shareholders could have been better. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer see improved performance, before increasing pay. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Jerónimo Martins SGPS.

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

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.