We Discuss Why Aeffe S.p.A.'s (BIT:AEF) CEO Compensation May Be Closely Reviewed

Key Insights

• Aeffe's Annual General Meeting to take place on 23rd of April
• Total pay for CEO Simone Badioli includes €332.0k salary
• The total compensation is 87% higher than the average for the industry
• Aeffe's EPS declined by 57% over the past three years while total shareholder loss over the past three years was 34%

Shareholders will probably not be too impressed with the underwhelming results at Aeffe S.p.A. (BIT:AEF) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 23rd of April. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Aeffe

How Does Total Compensation For Simone Badioli Compare With Other Companies In The Industry?

Our data indicates that Aeffe S.p.A. has a market capitalization of €76m, and total annual CEO compensation was reported as €337k for the year to December 2023. We note that's an increase of 32% above last year. In particular, the salary of €332.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Italian Luxury industry with market capitalizations below €188m, we found that the median total CEO compensation was €180k. This suggests that Simone Badioli is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	€332k	€250k	98%
Other	€5.2k	€5.2k	2%
Total Compensation	€337k	€255k	100%

Speaking on an industry level, nearly 52% of total compensation represents salary, while the remainder of 48% is other remuneration. Aeffe pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Aeffe S.p.A.'s Growth

Over the last three years, Aeffe S.p.A. has shrunk its earnings per share by 57% per year. Its revenue is down 9.4% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Aeffe S.p.A. Been A Good Investment?

The return of -34% over three years would not have pleased Aeffe S.p.A. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Aeffe pays its CEO a majority of compensation through a salary. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 2 warning signs for Aeffe you should be aware of, and 1 of them doesn't sit too well with us.

Important note: Aeffe is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.