Simon Arora became the CEO of B&M European Value Retail S.A. (LON:BME) in 2004, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Simon Arora Compare With Other Companies In The Industry?
According to our data, B&M European Value Retail S.A. has a market capitalization of UK£5.0b, and paid its CEO total annual compensation worth UK£1.2m over the year to March 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at UK£643.8k constitutes the majority of total compensation received by the CEO.
On examining similar-sized companies in the industry with market capitalizations between UK£3.1b and UK£9.3b, we discovered that the median CEO total compensation of that group was UK£1.4m. So it looks like B&M European Value Retail compensates Simon Arora in line with the median for the industry.
Speaking on an industry level, nearly 65% of total compensation represents salary, while the remainder of 35% is other remuneration. It's interesting to note that B&M European Value Retail allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
B&M European Value Retail S.A.'s Growth
Over the past three years, B&M European Value Retail S.A. has seen its earnings per share (EPS) grow by 13% per year. Its revenue is up 16% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has B&M European Value Retail S.A. Been A Good Investment?
We think that the total shareholder return of 41%, over three years, would leave most B&M European Value Retail S.A. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As previously discussed, Simon is compensated close to the median for companies of its size, and which belong to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. Indeed, many might consider that Simon is compensated rather modestly, given the solid company performance! In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for B&M European Value Retail that you should be aware of before investing.
Important note: B&M European Value Retail is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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. 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.
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