We Think Some Shareholders May Hesitate To Increase Pernod Ricard SA's (EPA:RI) CEO Compensation

Key Insights

• Pernod Ricard's Annual General Meeting to take place on 8th of November
• Total pay for CEO Alexandre Ricard includes €1.25m salary
• Total compensation is similar to the industry average
• Over the past three years, Pernod Ricard's EPS grew by 5.5% and over the past three years, the total loss to shareholders 39%

In the past three years, the share price of Pernod Ricard SA (EPA:RI) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 8th of November. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Pernod Ricard

Comparing Pernod Ricard SA's CEO Compensation With The Industry

According to our data, Pernod Ricard SA has a market capitalization of €29b, and paid its CEO total annual compensation worth €5.0m over the year to June 2024. We note that's a decrease of 13% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at €1.3m.

In comparison with other companies in the French Beverage industry with market capitalizations over €7.4b, the reported median total CEO compensation was €5.1m. This suggests that Pernod Ricard remunerates its CEO largely in line with the industry average. Moreover, Alexandre Ricard also holds €22m worth of Pernod Ricard stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	€1.3m	€1.3m	25%
Other	€3.8m	€4.5m	75%
Total Compensation	€5.0m	€5.7m	100%

On an industry level, roughly 72% of total compensation represents salary and 28% is other remuneration. Pernod Ricard sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Pernod Ricard SA's Growth Numbers

Pernod Ricard SA has seen its earnings per share (EPS) increase by 5.5% a year over the past three years. Its revenue is down 4.4% over the previous year.

We generally like to see a little revenue growth, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Pernod Ricard SA Been A Good Investment?

The return of -39% over three years would not have pleased Pernod Ricard SA shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Pernod Ricard (1 shouldn't be ignored!) that you should be aware of before investing here.

Important note: Pernod Ricard 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.