Paul Hermelin has been the CEO of Capgemini SE (EPA:CAP) since 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Paul Hermelin’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Capgemini SE has a market cap of €18b, and is paying total annual CEO compensation of €4.8m. (This is based on the year to December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at €1.5m. We took a group of companies with market capitalizations over €7.1b, and calculated the median CEO total compensation to be €2.9m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
It would therefore appear that Capgemini SE pays Paul Hermelin more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Capgemini has changed from year to year.
Is Capgemini SE Growing?
Over the last three years Capgemini SE has shrunk its earnings per share by an average of 17% per year (measured with a line of best fit). Its revenue is up 5.4% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Capgemini SE Been A Good Investment?
I think that the total shareholder return of 48%, over three years, would leave most Capgemini SE shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We examined the amount Capgemini SE pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.Earnings per share have not grown in three years, and the revenue growth fails to impress us.
However, we can’t argue with the strong returns to shareholders, over the same time period. So on this analysis we’d stop short of criticizing the level of CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Capgemini (free visualization of insider trades).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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