Yahoo Finance Should You Worry About Eni S.p.A.'s (BIT:ENI) CEO Pay?
Claudio Descalzi has been the CEO of Eni S.p.A. (BIT:ENI) since 2017. 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
View our latest analysis for Eni
How Does Claudio Descalzi's Compensation Compare With Similar Sized Companies?
Our data indicates that Eni S.p.A. is worth €33b, and total annual CEO compensation was reported as €6.5m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at €1.6m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations over €7.3b and the median CEO total compensation was €3.7m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 60% of total compensation out of all the companies we analysed, while other remuneration made up 40% of the pie. It's interesting to note that Eni allocates a smaller portion of compensation to salary in comparison to the broader industry.
Thus we can conclude that Claudio Descalzi receives more in total compensation than the median of a group of large companies in the same market as Eni S.p.A.. 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 Eni has changed from year to year.
Is Eni S.p.A. Growing?
On average over the last three years, Eni S.p.A. has seen earnings per share (EPS) move in a favourable direction by 33% each year (using a line of best fit). In the last year, its revenue is down 7.1%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Eni S.p.A. Been A Good Investment?
Since shareholders would have lost about 28% over three years, some Eni S.p.A. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
We examined the amount Eni S.p.A. pays its CEO, and compared it to the amount paid by other large companies. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. Considering positive per-share earnings movement, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Looking into other areas, we've picked out 5 warning signs for Eni that investors should think about before committing capital to this stock.
Important note: Eni may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
