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.

Component20192018Proportion (2019)
Salary €500k €500k 65%
Other €270k €300k 35%
Total Compensation€770k €800k100%

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.

ceo-compensation
BME:BKIA CEO Compensation August 11th 2020

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.
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