Increases to CEO Compensation Might Be Put On Hold For Now at Wendel (EPA:MF)

The anaemic share price growth at Wendel (EPA:MF) over the past few years has probably not impressed shareholders and may be due to earnings not growing over that period. Some of these issues will occupy shareholders' minds as the AGM rolls around on 29 June 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Wendel

Comparing Wendel's CEO Compensation With the industry

According to our data, Wendel has a market capitalization of €5.0b, and paid its CEO total annual compensation worth €4.4m over the year to December 2020. We note that's a decrease of 26% 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 same industry with market capitalizations ranging between €3.4b and €10b had a median total CEO compensation of €1.9m. This suggests that André François-Poncet is paid more than the median for the industry. Moreover, André François-Poncet also holds €1.5m worth of Wendel stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	€1.2m	€1.2m	26%
Other	€3.2m	€4.8m	74%
Total Compensation	€4.4m	€5.9m	100%

Talking in terms of the industry, salary represented approximately 57% of total compensation out of all the companies we analyzed, while other remuneration made up 43% of the pie. It's interesting to note that Wendel allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Wendel's Growth

Wendel has reduced its earnings per share by 16% a year over the last three years. It saw its revenue drop 8.1% over the last year.

The decline in EPS is a bit concerning. 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 Wendel Been A Good Investment?

Wendel has generated a total shareholder return of 0.5% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

The flat share price growth combined with the the fact that earnings have failed to grow makes us wonder whether the share price will have any further strong momentum. 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. We did our research and spotted 1 warning sign for Wendel that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

If you decide to trade Wendel, 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

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.