The CEO of Banco Santander, S.A. (BME:SAN) is Jose Antonio Alvarez Alvarez, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Banco Santander pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Banco Santander, S.A.'s CEO Compensation With the industry
At the time of writing, our data shows that Banco Santander, S.A. has a market capitalization of €27b, and reported total annual CEO compensation of €8.3m for the year to December 2019. That's a notable decrease of 8.1% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at €2.5m.
For comparison, other companies in the industry with market capitalizations above €6.9b, reported a median total CEO compensation of €2.1m. This suggests that Jose Antonio Alvarez Alvarez is paid more than the median for the industry. What's more, Jose Antonio Alvarez Alvarez holds €2.6m worth of shares in the company in their own name.
Speaking on an industry level, nearly 73% of total compensation represents salary, while the remainder of 27% is other remuneration. It's interesting to note that Banco Santander allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Banco Santander, S.A.'s Growth Numbers
Over the last three years, Banco Santander, S.A. has shrunk its earnings per share by 37% per year. Its revenue is down 8.0% over the previous year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. 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 Banco Santander, S.A. Been A Good Investment?
Given the total shareholder loss of 69% over three years, many shareholders in Banco Santander, S.A. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As previously discussed, Jose Antonio is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Banco Santander that investors should think about before committing capital to this stock.
Switching gears from Banco Santander, 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.
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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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