Is Zardoya Otis, S.A.'s (BME:ZOT) CEO Overpaid Relative To Its Peers?
Bernardo Calleja Fernandez is the CEO of Zardoya Otis, S.A. (BME:ZOT). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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 method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Zardoya Otis
How Does Bernardo Calleja Fernandez's Compensation Compare With Similar Sized Companies?
According to our data, Zardoya Otis, S.A. has a market capitalization of €2.9b, and paid its CEO total annual compensation worth €911k over the year to November 2018. We think total compensation is more important but we note that the CEO salary is lower, at €290k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from €1.8b to €5.8b, and discovered that the median CEO total compensation of that group was €932k.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Zardoya Otis. Speaking on an industry level, we can see that nearly 50% of total compensation represents salary, while the remainder of 50% is other remuneration. Zardoya Otis sets aside a smaller share of compensation for salary, in comparison to the overall industry.
That means Bernardo Calleja Fernandez receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance. You can see a visual representation of the CEO compensation at Zardoya Otis, below.
Is Zardoya Otis, S.A. Growing?
Over the last three years Zardoya Otis, S.A. has shrunk its earnings per share by an average of 4.1% per year (measured with a line of best fit). Its revenue is up 2.3% over last year.
Unfortunately, earnings per share have trended lower over the last three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Zardoya Otis, S.A. Been A Good Investment?
With a three year total loss of 22%, Zardoya Otis, S.A. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Remuneration for Bernardo Calleja Fernandez is close enough to the median pay for a CEO of a similar sized company .
After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Suffice it to say, we don't think the CEO is underpaid! On another note, we've spotted 1 warning sign for Zardoya Otis that investors should look into moving forward.
Important note: Zardoya Otis 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.
