Most Shareholders Will Probably Agree With Lectra SA's (EPA:LSS) CEO Compensation

By
Simply Wall St
Published
May 25, 2021
ENXTPA:LSS
Source: Shutterstock

The performance at Lectra SA (EPA:LSS) has been rather lacklustre of late and shareholders may be wondering what CEO Daniel Harari is planning to do about this. At the next AGM coming up on 01 June 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

Check out our latest analysis for Lectra

How Does Total Compensation For Daniel Harari Compare With Other Companies In The Industry?

Our data indicates that Lectra SA has a market capitalization of €990m, and total annual CEO compensation was reported as €494k for the year to December 2020. That's a notable decrease of 28% on last year. Notably, the salary which is €390.0k, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between €818m and €2.6b had a median total CEO compensation of €747k. This suggests that Daniel Harari is paid below the industry median. What's more, Daniel Harari holds €167m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary €390k €390k 79%
Other €104k €292k 21%
Total Compensation€494k €682k100%

On an industry level, roughly 31% of total compensation represents salary and 69% is other remuneration. According to our research, Lectra has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ENXTPA:LSS CEO Compensation May 26th 2021

Lectra SA's Growth

Over the last three years, Lectra SA has shrunk its earnings per share by 11% per year. Its revenue is down 13% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Lectra SA Been A Good Investment?

Boasting a total shareholder return of 49% over three years, Lectra SA has done well by shareholders. 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.

In Summary...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.

Shareholders may want to check for free if Lectra insiders are buying or selling shares.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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