Shareholders Will Probably Not Have Any Issues With Redeia Corporación, S.A.'s (BME:RED) CEO Compensation

Key Insights

• Redeia Corporación will host its Annual General Meeting on 3rd of June
• CEO Roberto García Merino's total compensation includes salary of €481.0k
• Total compensation is 53% below industry average
• Redeia Corporación's total shareholder return over the past three years was 16% while its EPS was down 0.3% over the past three years

Performance at Redeia Corporación, S.A. (BME:RED) has been rather uninspiring recently and shareholders may be wondering how CEO Roberto García Merino plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 3rd of June. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. In our opinion, CEO compensation does not look excessive and we discuss why.

See our latest analysis for Redeia Corporación

How Does Total Compensation For Roberto García Merino Compare With Other Companies In The Industry?

Our data indicates that Redeia Corporación, S.A. has a market capitalization of €8.9b, and total annual CEO compensation was reported as €890k for the year to December 2023. There was no change in the compensation compared to last year. In particular, the salary of €481.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies in the Spain Electric Utilities industry with market capitalizations above €7.4b, we found that the median total CEO compensation was €1.9m. Accordingly, Redeia Corporación pays its CEO under the industry median. Furthermore, Roberto García Merino directly owns €268k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	€481k	€481k	54%
Other	€409k	€409k	46%
Total Compensation	€890k	€890k	100%

On an industry level, around 54% of total compensation represents salary and 46% is other remuneration. Although there is a difference in how total compensation is set, Redeia Corporación more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Redeia Corporación, S.A.'s Growth Numbers

Redeia Corporación, S.A. saw earnings per share stay pretty flat over the last three years. In the last year, its revenue is down 2.5%.

A lack of EPS improvement is not good to see. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Redeia Corporación, S.A. Been A Good Investment?

Redeia Corporación, S.A. has served shareholders reasonably well, with a total return of 16% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Redeia Corporación that you should be aware of before investing.

Important note: Redeia Corporación 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.