What We Learned About Danone's (EPA:BN) CEO Compensation

This article will reflect on the compensation paid to Emmanuel Faber who has served as CEO of Danone S.A. (EPA:BN) since 2014. This analysis will also assess whether Danone pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Danone

How Does Total Compensation For Emmanuel Faber Compare With Other Companies In The Industry?

Our data indicates that Danone S.A. has a market capitalization of €34b, and total annual CEO compensation was reported as €4.0m for the year to December 2019. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €1.0m.

In comparison with other companies in the industry with market capitalizations over €6.7b , the reported median total CEO compensation was €3.2m. From this we gather that Emmanuel Faber is paid around the median for CEOs in the industry. Furthermore, Emmanuel Faber directly owns €5.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 49% of total compensation out of all the companies we analyzed, while other remuneration made up 51% of the pie. Danone sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Danone S.A.'s Growth

Danone S.A. saw earnings per share stay pretty flat over the last three years. In the last year, its revenue changed by just 0.1%.

Its a bit disappointing to see that the company has failed to grow its EPS. And the flat revenue is seriously uninspiring. 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 Danone S.A. Been A Good Investment?

Since shareholders would have lost about 21% over three years, some Danone S.A. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Emmanuel is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Danone that investors should be aware of in a dynamic business environment.

Important note: Danone 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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