Should Shareholders Reconsider CaixaBank, S.A.'s (BME:CABK) CEO Compensation Package?

By
Simply Wall St
Published
May 06, 2021
BME:CABK
Source: Shutterstock

The results at CaixaBank, S.A. (BME:CABK) have been quite disappointing recently and CEO Gonzalo María Gortazar Rotaeche bears some responsibility for this. At the upcoming AGM on 13 May 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for CaixaBank

Comparing CaixaBank, S.A.'s CEO Compensation With the industry

According to our data, CaixaBank, S.A. has a market capitalization of €22b, and paid its CEO total annual compensation worth €2.8m over the year to December 2020. We note that's a decrease of 25% compared to last year. We note that the salary of €1.56m makes up a sizeable portion of the total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations over €6.7b , the reported median total CEO compensation was €2.0m. This suggests that Gonzalo María Gortazar Rotaeche is paid more than the median for the industry. What's more, Gonzalo María Gortazar Rotaeche holds €3.2m worth of shares in the company in their own name.

Component20202019Proportion (2020)
Salary €1.6m €1.6m 55%
Other €1.3m €2.2m 45%
Total Compensation€2.8m €3.8m100%

On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. CaixaBank 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.

ceo-compensation
BME:CABK CEO Compensation May 7th 2021

CaixaBank, S.A.'s Growth

CaixaBank, S.A. has reduced its earnings per share by 9.3% a year over the last three years. It saw its revenue drop 4.3% over the last year.

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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has CaixaBank, S.A. Been A Good Investment?

With a total shareholder return of -35% over three years, CaixaBank, S.A. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for CaixaBank that investors should think about before committing capital to this stock.

Important note: CaixaBank is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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