Does Jerónimo Martins, SGPS, S.A.'s (ELI:JMT) CEO Pay Reflect Performance?
In 2010, Pedro de Castro Soares dos Santos was appointed CEO of Jerónimo Martins, SGPS, S.A. (ELI:JMT). 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Jerónimo Martins SGPS
How Does Pedro de Castro Soares dos Santos's Compensation Compare With Similar Sized Companies?
Our data indicates that Jerónimo Martins, SGPS, S.A. is worth €9.8b, and total annual CEO compensation was reported as €924k for the year to December 2019. That's less than last year. We think total compensation is more important but we note that the CEO salary is lower, at €240k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over €7.4b, and calculated the median CEO total compensation to be €3.6m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Jerónimo Martins SGPS. Speaking on an industry level, we can see that nearly 40% of total compensation represents salary, while the remainder of 60% is other remuneration. Non-salary compensation represents a greater slice of the remuneration pie for Jerónimo Martins SGPS, in sharp contrast to the overall sector.
Most shareholders would consider it a positive that Pedro de Castro Soares dos Santos takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business. The graphic below shows how CEO compensation at Jerónimo Martins SGPS has changed from year to year.
Is Jerónimo Martins, SGPS, S.A. Growing?
On average over the last three years, Jerónimo Martins, SGPS, S.A. has shrunk earnings per share by 16% each year (measured with a line of best fit). It achieved revenue growth of 7.5% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Jerónimo Martins, SGPS, S.A. Been A Good Investment?
Jerónimo Martins, SGPS, S.A. has generated a total shareholder return of 0.8% over three years, so most shareholders wouldn't be too disappointed. 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.
In Summary...
Jerónimo Martins, SGPS, S.A. is currently paying its CEO below what is normal for large companies.
Shareholders should note that compensation for Pedro de Castro Soares dos Santos is under the median of a group of large companies. But the business isn't growing earnings per share, and the returns to shareholders haven't been wonderful. There is room for improved company performance, but we don't see the CEO pay as a big issue here. So you may want to check if insiders are buying Jerónimo Martins SGPS shares with their own money (free access).
If you want to buy a stock that is better than Jerónimo Martins SGPS, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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