Shareholders May Not Be So Generous With Inventiva S.A.'s (EPA:IVA) CEO Compensation And Here's Why

Key Insights

• Inventiva to hold its Annual General Meeting on 20th of June
• Total pay for CEO Frederic Cren includes €305.0k salary
• The total compensation is 51% higher than the average for the industry
• Over the past three years, Inventiva's EPS fell by 28% and over the past three years, the total loss to shareholders 75%

Shareholders of Inventiva S.A. (EPA:IVA) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 20th of June will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

Check out our latest analysis for Inventiva

Comparing Inventiva S.A.'s CEO Compensation With The Industry

Our data indicates that Inventiva S.A. has a market capitalization of €151m, and total annual CEO compensation was reported as €1.0m for the year to December 2023. That's a notable increase of 14% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €305k.

On comparing similar companies from the French Biotechs industry with market caps ranging from €93m to €372m, we found that the median CEO total compensation was €664k. This suggests that Frederic Cren is paid more than the median for the industry. What's more, Frederic Cren holds €17m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	€305k	€300k	30%
Other	€699k	€578k	70%
Total Compensation	€1.0m	€878k	100%

On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. It's interesting to note that Inventiva allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Inventiva S.A.'s Growth

Over the last three years, Inventiva S.A. has shrunk its earnings per share by 28% per year. In the last year, its revenue is up 23%.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Inventiva S.A. Been A Good Investment?

With a total shareholder return of -75% over three years, Inventiva S.A. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 2 which are concerning) in Inventiva we think you should know about.

Important note: Inventiva 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com