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Why Constellium's (NYSE:CSTM) CEO Pay Matters

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Jean-Marc Germain has been the CEO of Constellium SE (NYSE:CSTM) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Constellium.

See our latest analysis for Constellium

How Does Total Compensation For Jean-Marc Germain Compare With Other Companies In The Industry?

At the time of writing, our data shows that Constellium SE has a market capitalization of US$1.2b, and reported total annual CEO compensation of €6.6m for the year to December 2019. That's a fairly small increase of 3.8% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €959k.

For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of €4.5m. Accordingly, our analysis reveals that Constellium SE pays Jean-Marc Germain north of the industry median. Furthermore, Jean-Marc Germain directly owns US$3.1m worth of shares in the company.

Component

2019

2018

Proportion (2019)

Salary

€959k

€869k

15%

Other

€5.6m

€5.4m

85%

Total Compensation

€6.6m

€6.3m

100%

Talking in terms of the industry, salary represented approximately 37% of total compensation out of all the companies we analyzed, while other remuneration made up 63% of the pie. Constellium sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at Constellium SE's Growth Numbers

Over the past three years, Constellium SE has seen its earnings per share (EPS) grow by 12% per year. Its revenue is down 10% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Constellium SE Been A Good Investment?

Since shareholders would have lost about 18% over three years, some Constellium SE investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we noted earlier, Constellium pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its EPS growth, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.

Whatever your view on compensation, you might want to check if insiders are buying or selling Constellium shares (free trial).

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.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.