We Think The Compensation For Rothschild & Co SCA's (EPA:ROTH) CEO Looks About Right

Shareholders may be wondering what CEO Alexandre de Rothschild plans to do to improve the less than great performance at Rothschild & Co SCA (EPA:ROTH) recently. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 20 May 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Rothschild & Co

How Does Total Compensation For Alexandre de Rothschild Compare With Other Companies In The Industry?

Our data indicates that Rothschild & Co SCA has a market capitalization of €2.4b, and total annual CEO compensation was reported as €500k for the year to December 2020. That's mostly flat as compared to the prior year's compensation. It is worth noting that the CEO compensation consists entirely of the salary, worth €500k.

For comparison, other companies in the same industry with market capitalizations ranging between €1.7b and €5.3b had a median total CEO compensation of €1.2m. Accordingly, Rothschild & Co pays its CEO under the industry median. Furthermore, Alexandre de Rothschild directly owns €620k worth of shares in the company.

Component	2020	2019	Proportion (2020)
Salary	€500k	€500k	100%
Other	-	€7.5k	-
Total Compensation	€500k	€508k	100%

Talking in terms of the industry, salary represented approximately 60% of total compensation out of all the companies we analyzed, while other remuneration made up 40% of the pie. Speaking on a company level, Rothschild & Co prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Rothschild & Co SCA's Growth Numbers

Rothschild & Co SCA has reduced its earnings per share by 14% a year over the last three years. In the last year, its revenue is down 3.8%.

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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Rothschild & Co SCA Been A Good Investment?

Rothschild & Co SCA has generated a total shareholder return of 14% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Rothschild & Co rewards its CEO solely through a salary, ignoring non-salary benefits completely. While it's true that shareholders have seen decent returns, it's hard to overlook the lack of earnings growth and this makes us wonder if the current returns can continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

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 Rothschild & Co that you should be aware of before investing.

Important note: Rothschild & Co is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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