Bernard Arnault has been the CEO of LVMH Moët Hennessy - Louis Vuitton, Société Européenne (EPA:MC) since 1989. First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Bernard Arnault's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that LVMH Moët Hennessy - Louis Vuitton, Société Européenne has a market cap of €166b, and reported total annual CEO compensation of €8.0m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at €1.1m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations over €7.1b and the median CEO total compensation was €3.4m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Thus we can conclude that Bernard Arnault receives more in total compensation than the median of a group of large companies in the same market as LVMH Moët Hennessy - Louis Vuitton, Société Européenne. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at LVMH Moët Hennessy - Louis Vuitton Société Européenne has changed from year to year.
Is LVMH Moët Hennessy - Louis Vuitton, Société Européenne Growing?
On average over the last three years, LVMH Moët Hennessy - Louis Vuitton, Société Européenne has grown earnings per share (EPS) by 18% each year (using a line of best fit). It achieved revenue growth of 15% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has LVMH Moët Hennessy - Louis Vuitton, Société Européenne Been A Good Investment?
I think that the total shareholder return of 77%, over three years, would leave most LVMH Moët Hennessy - Louis Vuitton, Société Européenne shareholders smiling. 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.
We compared total CEO remuneration at LVMH Moët Hennessy - Louis Vuitton, Société Européenne with the amount paid at other large companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. Looking into other areas, we've picked out 2 warning signs for LVMH Moët Hennessy - Louis Vuitton Société Européenne that investors should think about before committing capital to this stock.
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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