Is Vallourec SA (EPA:VK) Excessively Paying Its CEO?

In 2009 Philippe Crouzet was appointed CEO of Vallourec SA (EPA:VK). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Vallourec

How Does Philippe Crouzet’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Vallourec SA has a market cap of €1.0b, and is paying total annual CEO compensation of €2.1m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at €798k. We examined companies with market caps from €354m to €1.4b, and discovered that the median CEO compensation of that group was €562k.

Thus we can conclude that Philippe Crouzet receives more in total compensation than the median of a group of companies in the same market, and of similar size to Vallourec SA. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Vallourec has changed over time.

ENXTPA:VK CEO Compensation, March 6th 2019
ENXTPA:VK CEO Compensation, March 6th 2019

Is Vallourec SA Growing?

Vallourec SA has increased its earnings per share (EPS) by an average of 76% a year, over the last three years (using a line of best fit). It achieved revenue growth of 4.6% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.

Has Vallourec SA Been A Good Investment?

Since shareholders would have lost about 49% over three years, some Vallourec SA shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared the total CEO remuneration paid by Vallourec SA, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Vallourec.

Important note: Vallourec may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.