Shareholders Will Most Likely Find Nexans S.A.'s (EPA:NEX) CEO Compensation Acceptable

The share price of Nexans S.A. (EPA:NEX) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 12 May 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. 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.

View our latest analysis for Nexans

How Does Total Compensation For Christopher Guerin Compare With Other Companies In The Industry?

At the time of writing, our data shows that Nexans S.A. has a market capitalization of €3.0b, and reported total annual CEO compensation of €1.5m for the year to December 2020. Notably, that's a decrease of 24% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €570k.

In comparison with other companies in the industry with market capitalizations ranging from €1.7b to €5.3b, the reported median CEO total compensation was €1.5m. This suggests that Nexans remunerates its CEO largely in line with the industry average. Furthermore, Christopher Guerin directly owns €1.0m worth of shares in the company.

Component	2020	2019	Proportion (2020)
Salary	€570k	€600k	39%
Other	€888k	€1.3m	61%
Total Compensation	€1.5m	€1.9m	100%

On an industry level, around 39% of total compensation represents salary and 61% is other remuneration. Our data reveals that Nexans allocates salary more or less in line with the wider market. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Nexans S.A.'s Growth Numbers

Over the last three years, Nexans S.A. has shrunk its earnings per share by 16% per year. In the last year, its revenue is down 11%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Nexans S.A. Been A Good Investment?

We think that the total shareholder return of 79%, over three years, would leave most Nexans S.A. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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. We've identified 1 warning sign for Nexans that investors should be aware of in a dynamic business environment.

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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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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