This Is Why We Think REN - Redes Energéticas Nacionais, SGPS, S.A.'s (ELI:RENE) CEO Might Get A Pay Rise Approved By Shareholders

Key Insights

• REN - Redes Energéticas Nacionais SGPS to hold its Annual General Meeting on 9th of May
• Total pay for CEO Rodrigo de Araújo Costa includes €401.8k salary
• The overall pay is 63% below the industry average
• REN - Redes Energéticas Nacionais SGPS' EPS grew by 11% over the past three years while total shareholder return over the past three years was 13%

Shareholders will be pleased by the robust performance of REN - Redes Energéticas Nacionais, SGPS, S.A. (ELI:RENE) recently and this will be kept in mind in the upcoming AGM on 9th of May. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

Check out our latest analysis for REN - Redes Energéticas Nacionais SGPS

How Does Total Compensation For Rodrigo de Araújo Costa Compare With Other Companies In The Industry?

At the time of writing, our data shows that REN - Redes Energéticas Nacionais, SGPS, S.A. has a market capitalization of €1.5b, and reported total annual CEO compensation of €876k for the year to December 2023. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €402k.

For comparison, other companies in the Portugal Integrated Utilities industry with market capitalizations ranging between €932m and €3.0b had a median total CEO compensation of €2.3m. In other words, REN - Redes Energéticas Nacionais SGPS pays its CEO lower than the industry median.

Component	2023	2022	Proportion (2023)
Salary	€402k	€392k	46%
Other	€474k	€481k	54%
Total Compensation	€876k	€873k	100%

On an industry level, roughly 41% of total compensation represents salary and 59% is other remuneration. REN - Redes Energéticas Nacionais SGPS is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

REN - Redes Energéticas Nacionais, SGPS, S.A.'s Growth

Over the past three years, REN - Redes Energéticas Nacionais, SGPS, S.A. has seen its earnings per share (EPS) grow by 11% per year. It achieved revenue growth of 21% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 REN - Redes Energéticas Nacionais, SGPS, S.A. Been A Good Investment?

REN - Redes Energéticas Nacionais, SGPS, S.A. has served shareholders reasonably well, with a total return of 13% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

The company's overall performance, while not bad, could be better. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 2 which don't sit too well with us) in REN - Redes Energéticas Nacionais SGPS we think you should know about.

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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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.