What Did EFG International's (VTX:EFGN) CEO Take Home Last Year?

Simply Wall St
July 06, 2020

Giorgio Pradelli became the CEO of EFG International AG (VTX:EFGN) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for EFG International.

See our latest analysis for EFG International

Comparing EFG International AG's CEO Compensation With the industry

At the time of writing, our data shows that EFG International AG has a market capitalization of CHF2.0b, and reported total annual CEO compensation of CHF2.7m for the year to December 2019. That's a slightly lower by 5.5% over the previous year. Notably, the salary which is CHF1.58m, represents most of the total compensation being paid.

On examining similar-sized companies in the industry with market capitalizations between CHF945m and CHF3.0b, we discovered that the median CEO total compensation of that group was CHF866k. Accordingly, our analysis reveals that EFG International AG pays Giorgio Pradelli north of the industry median. What's more, Giorgio Pradelli holds CHF1.7m worth of shares in the company in their own name.

Component20192018Proportion (2019)
Salary CHF1.6m CHF1.6m 59%
Other CHF1.1m CHF1.2m 41%
Total CompensationCHF2.7m CHF2.8m100%

Talking in terms of the industry, salary represented approximately 40% of total compensation out of all the companies we analyzed, while other remuneration made up 60% of the pie. EFG International pays out 59% of remuneration in the form of a salary, significantly higher than the industry average. 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.

SWX:EFGN CEO Compensation July 6th 2020
SWX:EFGN CEO Compensation July 6th 2020

A Look at EFG International AG's Growth Numbers

Over the last three years, EFG International AG has shrunk its earnings per share by 34% per year. Its revenue is up 2.5% over the last year.

Few shareholders would be pleased to read that earnings have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has EFG International AG Been A Good Investment?

EFG International AG has generated a total shareholder return of 19% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

As we noted earlier, EFG International pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Meanwhile, earnings per share has not been growing sufficiently to impress us, over the last three years. And shareholder returns are decent but not great. So you can understand why we do not think CEO compensation is particularly modest!

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 2 warning signs for EFG International that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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