Does Givaudan's (VTX:GIVN) CEO Salary Compare Well With Industry Peers?

Gilles Andrier has been the CEO of Givaudan SA (VTX:GIVN) since 2005, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Givaudan

How Does Total Compensation For Gilles Andrier Compare With Other Companies In The Industry?

At the time of writing, our data shows that Givaudan SA has a market capitalization of CHF33b, and reported total annual CEO compensation of CHF6.6m for the year to December 2020. That's just a smallish increase of 4.4% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CHF1.2m.

In comparison with other companies in the industry with market capitalizations over CHF7.1b , the reported median total CEO compensation was CHF4.1m. Hence, we can conclude that Gilles Andrier is remunerated higher than the industry median. What's more, Gilles Andrier holds CHF11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 58% of total compensation represents salary and 42% is other remuneration. Givaudan sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Givaudan SA's Growth Numbers

Givaudan SA saw earnings per share stay pretty flat over the last three years. In the last year, its revenue is up 6.4%.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Givaudan SA Been A Good Investment?

Most shareholders would probably be pleased with Givaudan SA for providing a total return of 77% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

As we touched on above, Givaudan SA is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But shareholder returns have been positive for the last three years. That's why we were hoping EPS growth would match this growth, but sadly that is not the case. We'd ideally want to see higher EPS growth, but CEO compensation seems to be within reason, given high shareholder returns.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Givaudan that investors should be aware of in a dynamic business environment.

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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