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How Should Investors React To Bankia's (BME:BKIA) CEO Pay?
This article will reflect on the compensation paid to José Sevilla Álvarez who has served as CEO of Bankia, S.A. (BME:BKIA) since 2014. This analysis will also assess whether Bankia pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Bankia
How Does Total Compensation For José Sevilla Álvarez Compare With Other Companies In The Industry?
Our data indicates that Bankia, S.A. has a market capitalization of €3.6b, and total annual CEO compensation was reported as €770k for the year to December 2019. That's a slight decrease of 3.8% on the prior year. Notably, the salary which is €500.0k, represents most of the total compensation being paid.
For comparison, other companies in the same industry with market capitalizations ranging between €1.7b and €5.4b had a median total CEO compensation of €989k. This suggests that Bankia remunerates its CEO largely in line with the industry average. Furthermore, José Sevilla Álvarez directly owns €64k worth of shares in the company.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | €500k | €500k | 65% |
| Other | €270k | €300k | 35% |
| Total Compensation | €770k | €800k | 100% |
On an industry level, around 73% of total compensation represents salary and 27% is other remuneration. It's interesting to note that Bankia allocates a smaller portion of compensation to salary in comparison to the broader industry. 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.
Bankia, S.A.'s Growth
Over the last three years, Bankia, S.A. has shrunk its earnings per share by 37% per year. It saw its revenue drop 19% over the last year.
The decline in earnings is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Bankia, S.A. Been A Good Investment?
Given the total shareholder loss of 67% over three years, many shareholders in Bankia, S.A. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As we noted earlier, Bankia pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, earnings growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 4 warning signs for Bankia that investors should be aware of in a dynamic business environment.
Switching gears from Bankia, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
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Trending Discussion
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anthony_x0j2w on Platform Group SE KGaA ·
Hello,(I am a shareholder).I spent the summer investigating in whatever I was able to find in the press, the trustee, or legal, and comparing it to FS Benner's declaration/transcripts:press: MM has a tendancy to use facts, modify them and turn them the way they want: 100% of their claims against TPG0 is traçable factually, 80% is flawed and interpreted. Example are numerous: 11M loans banks to be paid seems right, but it has not been an issue at all, it has been paid in full. (and it happens all the time in every business...); the previous HR becoming a financial director in the article herself being attacked by TPG on the legal side; the wrong address of curator (if truly announced by TPG).Trustee: according to my research (which can be incomplete) no communication to the Nordic trustee (hereby, bond holders) has been done on a, indebtedness (late payment) > 1M€, which is their obligation by contract (clause 14.d - https://corporate.the-platform-group.com/bond/) => this is a sign of a huge lie and fraud, or the sign that there is no indebtedness > 1M€ over the whole TPG group.Legal: still awaiting for an answer, probable that I won't get it.VALUATIONYou can spent hours working the fundamentals, if they're flawed...the thesis falls.Anyway, I always substracts the badwill (that I consider non-current - you have it in the CFS) & non-controlling interests from my valuation:Earnings ~22MFCF ~40M€The financial statements are not the issue here, we are more on an cheap option on the sincerity of the accounts that a real valuation. Unfortunately, these are unverifiable elements, hence the low price./!\ Careful:the accounts are consolidated and skip the subsidiaries issues...Careful with the business model: TPG0 is a financial holding that acquire subsidiaries, hold the debt, and has no operations. 100% of the Cash Flow comes from subs' dividends => it is a risk here, more a plumber risk than an operational one, but nevertheless...The auditor is too small, and managed by the same firm than before, with 140K€/year commission => it's too low, nobody external really reviewed what Benner and his team are doing internallycapital increase do not go through the CFS, but through change in equity AND equity in the BSIf the equity stays low too long, the WACC increase will be unbearable (I have a 30% global, with a 118% on equity): diluting is expensive => TPG machine can stay broken for a while.Most of the people I talk with never saw this, while this is ESSENTIAL to Benner's business model.SEVERAL EVENTS THAT COULD CHANGE:AEP is being audited by KPMG: if Benner plays the "we will propose KPMG to our shareholders BEOY", this can increase the trust in him significantly/KPMG (or other) to validate the 2026 IFRS accounts & having a word on HGB's: though still consolidated, at least we'll know...AEP being eventually acquired: while it carries a high integration risk due to its size, they talked about it so many times, that trust goes with it.Without this combination of event, the equity is doomed to stay at this level, IMO.Do not forget to also follow the bond: with TPG's announced safe harbor plan for buyback (25% of daily exchange), it is also interesting to check this illiquid and retail market: https://live.deutsche-boerse.com/bond/no0013256834-the-platform-group-ag-8-875-24-28?mic=XFRA
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