Shareholders May Be Wary Of Increasing Dassault Aviation SA's (EPA:AM) CEO Compensation Package

Dassault Aviation SA (EPA:AM) has not performed well recently and CEO Eric Trappier will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 11 May 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Dassault Aviation

Comparing Dassault Aviation SA's CEO Compensation With the industry

At the time of writing, our data shows that Dassault Aviation SA has a market capitalization of €7.5b, and reported total annual CEO compensation of €2.9m for the year to December 2020. That's a slight decrease of 4.2% on the prior year. In particular, the salary of €1.60m, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from €3.3b to €9.9b, we found that the median CEO total compensation was €3.7m. From this we gather that Eric Trappier is paid around the median for CEOs in the industry. Moreover, Eric Trappier also holds €3.5m worth of Dassault Aviation stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	€1.6m	€1.6m	55%
Other	€1.3m	€1.5m	45%
Total Compensation	€2.9m	€3.0m	100%

Speaking on an industry level, nearly 49% of total compensation represents salary, while the remainder of 51% is other remuneration. Dassault Aviation is paying a higher share of its remuneration through a 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.

A Look at Dassault Aviation SA's Growth Numbers

Over the last three years, Dassault Aviation SA has shrunk its earnings per share by 22% per year. It saw its revenue drop 25% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Dassault Aviation SA Been A Good Investment?

With a total shareholder return of -44% over three years, Dassault Aviation SA shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

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 2 warning signs for Dassault Aviation that investors should think about before committing capital to this 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.

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