Why We Think Pernod Ricard SA's (EPA:RI) CEO Compensation Is Not Excessive At All

Key Insights

• Pernod Ricard will host its Annual General Meeting on 10th 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 92% and over the past three years, the total shareholder return was 25%

Performance at Pernod Ricard SA (EPA:RI) has been reasonably good and CEO Alexandre Ricard has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 10th of November. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

See our latest analysis for Pernod Ricard

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

Our data indicates that Pernod Ricard SA has a market capitalization of €44b, and total annual CEO compensation was reported as €5.7m for the year to June 2023. We note that's a small decrease of 5.1% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €1.3m.

For comparison, other companies in the French Beverage industry with market capitalizations above €7.4b, reported a median total CEO compensation of €5.7m. From this we gather that Alexandre Ricard is paid around the median for CEOs in the industry. Moreover, Alexandre Ricard also holds €32m 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	2023	2022	Proportion (2023)
Salary	€1.3m	€1.3m	22%
Other	€4.5m	€4.8m	78%
Total Compensation	€5.7m	€6.0m	100%

Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. Pernod Ricard 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.

A Look at Pernod Ricard SA's Growth Numbers

Over the past three years, Pernod Ricard SA has seen its earnings per share (EPS) grow by 92% per year. In the last year, its revenue is up 13%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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?

Pernod Ricard SA has generated a total shareholder return of 25% 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...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in Pernod Ricard we think you should know about.

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.