What We Learned About Publicis Groupe's (EPA:PUB) CEO Pay

Arthur Sadoun became the CEO of Publicis Groupe S.A. (EPA:PUB) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Publicis Groupe pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Publicis Groupe

Comparing Publicis Groupe S.A.'s CEO Compensation With the industry

According to our data, Publicis Groupe S.A. has a market capitalization of €8.9b, and paid its CEO total annual compensation worth €3.3m over the year to December 2019. Notably, that's a decrease of 21% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at €1.0m.

For comparison, other companies in the industry with market capitalizations above €6.8b, reported a median total CEO compensation of €7.6m. In other words, Publicis Groupe pays its CEO lower than the industry median. What's more, Arthur Sadoun holds €4.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 46% of total compensation represents salary and 54% is other remuneration. It's interesting to note that Publicis Groupe 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.

Publicis Groupe S.A.'s Growth

Publicis Groupe S.A.'s earnings per share (EPS) grew 29% per year over the last three years. It achieved revenue growth of 13% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, 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 Publicis Groupe S.A. Been A Good Investment?

Since shareholders would have lost about 23% over three years, some Publicis Groupe S.A. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we touched on above, Publicis Groupe S.A. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However we must not forget that the EPS growth has been very strong over three years. It's tough to criticize CEO compensation when the per-share EPS movement is positive. But shareholders will likely want to hold off on any raise for Arthur until investor returns are positive.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 6 warning signs for Publicis Groupe that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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