It Looks Like Claranova SE's (EPA:CLA) CEO May Expect Their Salary To Be Put Under The Microscope

Key Insights

• Claranova will host its Annual General Meeting on 29th of November
• CEO Pierre Cesarini's total compensation includes salary of €340.1k
• Total compensation is 364% above industry average
• Over the past three years, Claranova's EPS fell by 95% and over the past three years, the total loss to shareholders 80%

The results at Claranova SE (EPA:CLA) have been quite disappointing recently and CEO Pierre Cesarini bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 29th of November. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Claranova

How Does Total Compensation For Pierre Cesarini Compare With Other Companies In The Industry?

Our data indicates that Claranova SE has a market capitalization of €81m, and total annual CEO compensation was reported as €1.2m for the year to June 2023. Notably, that's an increase of 22% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at €340k.

On comparing similar-sized companies in the French Software industry with market capitalizations below €184m, we found that the median total CEO compensation was €260k. Accordingly, our analysis reveals that Claranova SE pays Pierre Cesarini north of the industry median. Moreover, Pierre Cesarini also holds €2.8m worth of Claranova stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	€340k	€375k	28%
Other	€866k	€615k	72%
Total Compensation	€1.2m	€990k	100%

Talking in terms of the industry, salary represented approximately 42% of total compensation out of all the companies we analyzed, while other remuneration made up 58% of the pie. Claranova pays a modest slice of remuneration through salary, as compared 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.

A Look at Claranova SE's Growth Numbers

Claranova SE has reduced its earnings per share by 95% a year over the last three years. It achieved revenue growth of 7.1% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Claranova SE Been A Good Investment?

Few Claranova SE shareholders would feel satisfied with the return of -80% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Claranova (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Important note: Claranova 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.