Shareholders Will Probably Be Cautious Of Increasing Faurecia S.E.'s (EPA:EO) CEO Compensation At The Moment

By
Simply Wall St
Published
May 24, 2021
ENXTPA:EO
Source: Shutterstock

The underwhelming performance at Faurecia S.E. (EPA:EO) recently has probably not pleased shareholders. At the upcoming AGM on 31 May 2021, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

Check out our latest analysis for Faurecia

Comparing Faurecia S.E.'s CEO Compensation With the industry

At the time of writing, our data shows that Faurecia S.E. has a market capitalization of €6.1b, and reported total annual CEO compensation of €2.8m for the year to December 2020. That's a notable decrease of 26% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €855k.

On examining similar-sized companies in the industry with market capitalizations between €3.3b and €9.8b, we discovered that the median CEO total compensation of that group was €4.2m. In other words, Faurecia pays its CEO lower than the industry median. What's more, Patrick Koller holds €3.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary €855k €863k 31%
Other €1.9m €2.9m 69%
Total Compensation€2.8m €3.7m100%

Speaking on an industry level, nearly 31% of total compensation represents salary, while the remainder of 69% is other remuneration. Our data reveals that Faurecia allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ENXTPA:EO CEO Compensation May 25th 2021

A Look at Faurecia S.E.'s Growth Numbers

Faurecia S.E. has reduced its earnings per share by 65% a year over the last three years. It saw its revenue drop 17% 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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Faurecia S.E. Been A Good Investment?

The return of -36% over three years would not have pleased Faurecia S.E. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Faurecia (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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.

If you decide to trade Faurecia, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.