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Should You Be Pleased About The CEO Pay At Orange S.A.'s (EPA:ORA)

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Simply Wall St
·4 min read
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In 2011, Stéphane Richard was appointed CEO of Orange S.A. (EPA:ORA). 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.

See our latest analysis for Orange

How Does Stéphane Richard's Compensation Compare With Similar Sized Companies?

According to our data, Orange S.A. has a market capitalization of €30b, and paid its CEO total annual compensation worth €2.3m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at €933k. When we examined a group of companies with market caps over €7.4b, we found that their median CEO total compensation was €3.9m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 49% of total compensation represents salary, while the remainder of 51% is other remuneration. Orange does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.

At first glance this seems like a real positive for shareholders, since Stéphane Richard is paid less than the average total compensation paid by other large companies. 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 Orange has changed from year to year.

ENXTPA:ORA CEO Compensation April 23rd 2020
ENXTPA:ORA CEO Compensation April 23rd 2020

Is Orange S.A. Growing?

Over the last three years Orange S.A. has seen earnings per share (EPS) move in a positive direction by an average of 55% per year (using a line of best fit). It achieved revenue growth of 2.1% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. You might want to check this free visual report on analyst forecasts for future earnings.

Has Orange S.A. Been A Good Investment?

Since shareholders would have lost about 11% over three years, some Orange S.A. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

It appears that Orange S.A. remunerates its CEO below most large companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. Few would deny that the total shareholder return over the last three years could have been a lot better. We're not critical of the remuneration Stéphane Richard receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. Moving away from CEO compensation for the moment, we've identified 2 warning signs for Orange that you should be aware of before investing.

If you want to buy a stock that is better than Orange, this free list of high return, low debt companies is a great place to look.

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.