Despite VINCI SA's (EPA:DG) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. The upcoming AGM on 08 April 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.
Comparing VINCI SA's CEO Compensation With the industry
According to our data, VINCI SA has a market capitalization of €49b, and paid its CEO total annual compensation worth €4.3m over the year to December 2020. We note that's a decrease of 21% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.2m.
For comparison, other companies in the industry with market capitalizations above €6.8b, reported a median total CEO compensation of €3.2m. Accordingly, our analysis reveals that VINCI SA pays Xavier M. Huillard north of the industry median. Furthermore, Xavier M. Huillard directly owns €35m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 52% of total compensation represents salary and 48% is other remuneration. VINCI sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
VINCI SA's Growth
Over the last three years, VINCI SA has shrunk its earnings per share by 23% per year. Its revenue is down 9.8% over the previous year.
The decline in EPS is a bit concerning. 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. 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 VINCI SA Been A Good Investment?
VINCI SA has served shareholders reasonably well, with a total return of 20% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with 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 4 warning signs for VINCI that investors should think about before committing capital to this stock.
Switching gears from VINCI, 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.
When trading VINCI or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.