Here's Why Shareholders May Want To Be Cautious With Increasing L'Air Liquide S.A.'s (EPA:AI) CEO Pay Packet

CEO Benoît Potier has done a decent job of delivering relatively good performance at L'Air Liquide S.A. (EPA:AI) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 04 May 2021. However, some shareholders will still be cautious of paying the CEO excessively.

Check out our latest analysis for L'Air Liquide

Comparing L'Air Liquide S.A.'s CEO Compensation With the industry

Our data indicates that L'Air Liquide S.A. has a market capitalization of €67b, and total annual CEO compensation was reported as €5.0m for the year to December 2020. That's a notable decrease of 11% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.3m.

In comparison with other companies in the industry with market capitalizations over €6.6b , the reported median total CEO compensation was €3.7m. This suggests that Benoît Potier is paid more than the median for the industry. Furthermore, Benoît Potier directly owns €75m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	€1.3m	€1.3m	26%
Other	€3.7m	€4.3m	74%
Total Compensation	€5.0m	€5.7m	100%

Speaking on an industry level, nearly 83% of total compensation represents salary, while the remainder of 17% is other remuneration. It's interesting to note that L'Air Liquide allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

L'Air Liquide S.A.'s Growth

L'Air Liquide S.A. has seen its earnings per share (EPS) increase by 2.7% a year over the past three years. It saw its revenue drop 6.5% over the last year.

We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has L'Air Liquide S.A. Been A Good Investment?

Most shareholders would probably be pleased with L'Air Liquide S.A. for providing a total return of 55% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for L'Air Liquide that investors should be aware of in a dynamic business environment.

Important note: L'Air Liquide 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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