Here's Why Compagnie Financière Richemont SA's (VTX:CFR) CEO Compensation Is The Least Of Shareholders' Concerns

By
Simply Wall St
Published
September 01, 2021
SWX:CFR
Source: Shutterstock

CEO Jerome Lambert has done a decent job of delivering relatively good performance at Compagnie Financière Richemont SA (VTX:CFR) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 08 September 2021. We present our case of why we think CEO compensation looks fair.

See our latest analysis for Compagnie Financière Richemont

How Does Total Compensation For Jerome Lambert Compare With Other Companies In The Industry?

At the time of writing, our data shows that Compagnie Financière Richemont SA has a market capitalization of CHF59b, and reported total annual CEO compensation of €4.1m for the year to March 2021. We note that's a decrease of 45% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.4m.

On comparing similar companies in the industry with market capitalizations above CHF7.3b, we found that the median total CEO compensation was €3.4m. So it looks like Compagnie Financière Richemont compensates Jerome Lambert in line with the median for the industry. Furthermore, Jerome Lambert directly owns CHF119k worth of shares in the company.

Component20212020Proportion (2021)
Salary €1.4m €1.9m 35%
Other €2.7m €5.7m 65%
Total Compensation€4.1m €7.6m100%

On an industry level, around 72% of total compensation represents salary and 28% is other remuneration. Compagnie Financière Richemont sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
SWX:CFR CEO Compensation September 2nd 2021

A Look at Compagnie Financière Richemont SA's Growth Numbers

Compagnie Financière Richemont SA's earnings per share (EPS) grew 2.1% per year over the last three years. Its revenue is down 7.7% over the previous year.

We generally like to see a little revenue growth, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Compagnie Financière Richemont SA Been A Good Investment?

Compagnie Financière Richemont SA has served shareholders reasonably well, with a total return of 33% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for Compagnie Financière Richemont that investors should look into moving forward.

Switching gears from Compagnie Financière Richemont, 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.

When trading Compagnie Financière Richemont or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.