Increases to CEO Compensation Might Be Put On Hold For Now at SMCP S.A. (EPA:SMCP)

Key Insights

• SMCP's Annual General Meeting to take place on 6th of June
• Salary of €800.0k is part of CEO Isabelle Guichot's total remuneration
• Total compensation is 91% above industry average
• Over the past three years, SMCP's EPS grew by 86% and over the past three years, the total loss to shareholders 66%

Shareholders of SMCP S.A. (EPA:SMCP) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 6th of June could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for SMCP

How Does Total Compensation For Isabelle Guichot Compare With Other Companies In The Industry?

According to our data, SMCP S.A. has a market capitalization of €195m, and paid its CEO total annual compensation worth €1.5m over the year to December 2023. Notably, that's a decrease of 15% over the year before. We note that the salary of €800.0k makes up a sizeable portion of the total compensation received by the CEO.

For comparison, other companies in the French Specialty Retail industry with market capitalizations ranging between €92m and €369m had a median total CEO compensation of €760k. Accordingly, our analysis reveals that SMCP S.A. pays Isabelle Guichot north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	€800k	€800k	55%
Other	€652k	€899k	45%
Total Compensation	€1.5m	€1.7m	100%

On an industry level, around 55% of total compensation represents salary and 45% is other remuneration. Although there is a difference in how total compensation is set, SMCP more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

SMCP S.A.'s Growth

SMCP S.A.'s earnings per share (EPS) grew 86% per year over the last three years. It achieved revenue growth of 2.0% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 SMCP S.A. Been A Good Investment?

The return of -66% over three years would not have pleased SMCP S.A. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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 SMCP that investors should think about before committing capital to this stock.

Switching gears from SMCP, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.