Here's Why It's Unlikely That ERAMET S.A.'s (EPA:ERA) CEO Will See A Pay Rise This Year

ERAMET S.A. (EPA:ERA) has not performed well recently and CEO Christel Bories will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 28 May 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for ERAMET

Comparing ERAMET S.A.'s CEO Compensation With the industry

According to our data, ERAMET S.A. has a market capitalization of €1.6b, and paid its CEO total annual compensation worth €2.4m over the year to December 2020. We note that's a decrease of 12% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €767k.

In comparison with other companies in the industry with market capitalizations ranging from €821m to €2.6b, the reported median CEO total compensation was €924k. Hence, we can conclude that Christel Bories is remunerated higher than the industry median. What's more, Christel Bories holds €412k worth of shares in the company in their own name.

Component	2020	2019	Proportion (2020)
Salary	€767k	€800k	31%
Other	€1.7m	€2.0m	69%
Total Compensation	€2.4m	€2.8m	100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. In ERAMET's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ERAMET S.A.'s Growth

ERAMET S.A. has reduced its earnings per share by 120% a year over the last three years. It saw its revenue drop 3.1% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 ERAMET S.A. Been A Good Investment?

The return of -60% over three years would not have pleased ERAMET S.A. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling ERAMET (free visualization of insider trades).

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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