Most Shareholders Will Probably Agree With Aedifica SA's (EBR:AED) CEO Compensation

CEO Mrics Gielens has done a decent job of delivering relatively good performance at Aedifica SA (EBR:AED) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 11 May 2021. Here is our take on why we think the CEO compensation looks appropriate.

Check out our latest analysis for Aedifica

Comparing Aedifica SA's CEO Compensation With the industry

According to our data, Aedifica SA has a market capitalization of €3.4b, and paid its CEO total annual compensation worth €1.5m over the year to December 2020. We note that's an increase of 28% above last year. In particular, the salary of €753.4k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from €1.7b to €5.3b, we found that the median CEO total compensation was €1.3m. This suggests that Aedifica remunerates its CEO largely in line with the industry average. Moreover, Mrics Gielens also holds €1.3m worth of Aedifica stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	€753k	€502k	50%
Other	€739k	€660k	50%
Total Compensation	€1.5m	€1.2m	100%

On an industry level, roughly 63% of total compensation represents salary and 38% is other remuneration. Aedifica sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Aedifica SA's Growth Numbers

Over the last three years, Aedifica SA has not seen its earnings per share change much, though there is a slight positive movement. It achieved revenue growth of 23% over the last year.

We think the revenue growth is good. And the improvement in EPSis modest but respectable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. 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 Aedifica SA Been A Good Investment?

We think that the total shareholder return of 64%, over three years, would leave most Aedifica SA shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for Aedifica (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

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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