Here's Why Inventiva S.A.'s (EPA:IVA) CEO May Deserve A Raise

Shareholders will be pleased by the impressive results for Inventiva S.A. (EPA:IVA) recently and CEO Frederic Cren has played a key role. At the upcoming AGM on 16 April 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

Check out our latest analysis for Inventiva

How Does Total Compensation For Frederic Cren Compare With Other Companies In The Industry?

At the time of writing, our data shows that Inventiva S.A. has a market capitalization of €470m, and reported total annual CEO compensation of €388k for the year to December 2020. That's a modest increase of 3.8% on the prior year. Notably, the salary which is €267.0k, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from €168m to €673m, we found that the median CEO total compensation was €912k. That is to say, Frederic Cren is paid under the industry median. What's more, Frederic Cren holds €68m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	€267k	€243k	69%
Other	€121k	€131k	31%
Total Compensation	€388k	€374k	100%

On an industry level, roughly 53% of total compensation represents salary and 47% is other remuneration. Inventiva pays out 69% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Inventiva S.A.'s Growth

Over the past three years, Inventiva S.A. has seen its earnings per share (EPS) grow by 13% per year. In the last year, its revenue is down 53%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Inventiva S.A. Been A Good Investment?

We think that the total shareholder return of 67%, over three years, would leave most Inventiva S.A. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. However, despite the strong growth in earnings and share price growth, the focus for shareholders would be how the company plans to steer the company towards sustainable profitability in the near future.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Inventiva that you should be aware of before investing.

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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