Shareholders May Be Wary Of Increasing KBC Group NV's (EBR:KBC) CEO Compensation Package

KBC Group NV (EBR:KBC) has not performed well recently and CEO Johan Thijs will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 06 May 2021. 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. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for KBC Group

Comparing KBC Group NV's CEO Compensation With the industry

Our data indicates that KBC Group NV has a market capitalization of €27b, and total annual CEO compensation was reported as €2.2m for the year to December 2020. That's a slight decrease of 5.8% on the prior year. Notably, the salary which is €1.27m, represents a considerable chunk of the total compensation being paid.

On comparing similar companies in the industry with market capitalizations above €6.6b, we found that the median total CEO compensation was €2.2m. So it looks like KBC Group compensates Johan Thijs in line with the median for the industry.

Component	2020	2019	Proportion (2020)
Salary	€1.3m	€1.3m	56%
Other	€980k	€1.1m	44%
Total Compensation	€2.2m	€2.4m	100%

Speaking on an industry level, nearly 74% of total compensation represents salary, while the remainder of 26% is other remuneration. It's interesting to note that KBC Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

KBC Group NV's Growth

KBC Group NV has reduced its earnings per share by 18% a year over the last three years. In the last year, its revenue is down 17%.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. 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 KBC Group NV Been A Good Investment?

Given the total shareholder loss of 2.2% over three years, many shareholders in KBC Group NV are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for KBC Group that you should be aware of before investing.

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.

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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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