Stéphane Richard became the CEO of Orange S.A. (EPA:ORA) in 2011, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Stéphane Richard Compare With Other Companies In The Industry?
At the time of writing, our data shows that Orange S.A. has a market capitalization of €27b, and reported total annual CEO compensation of €1.9m for the year to December 2019. Notably, that's a decrease of 17% over the year before. We note that the salary portion, which stands at €950.0k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the industry with market capitalizations above €6.7b, reported a median total CEO compensation of €2.3m. From this we gather that Stéphane Richard is paid around the median for CEOs in the industry. What's more, Stéphane Richard holds €325k worth of shares in the company in their own name.
Speaking on an industry level, salary and non-salary portions, both make up 50% each of the total remuneration. Although there is a difference in how total compensation is set, Orange more or less reflects the market in terms of setting the salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Orange S.A.'s Growth Numbers
Orange S.A. has seen its earnings per share (EPS) increase by 248% a year over the past three years. Its revenue is up 1.8% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Orange S.A. Been A Good Investment?
With a three year total loss of 18% for the shareholders, Orange S.A. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we touched on above, Orange S.A. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, the company has logged negative shareholder returns over the last three years. But on the bright side, EPS growth is positive over the same period. Overall, we wouldn't say Stéphane is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for Orange that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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This article by Simply Wall St is general in nature. 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.
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