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Is Allreal Holding AG (VTX:ALLN) Excessively Paying Its CEO?

Simply Wall St

Roger Herzog became the CEO of Allreal Holding AG (VTX:ALLN) in 2015. First, this article will compare CEO compensation with compensation at similar sized 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 method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Allreal Holding

How Does Roger Herzog's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Allreal Holding AG has a market cap of CHF2.7b, and reported total annual CEO compensation of CHF1.2m for the year to December 2019. That's a fairly small increase of 3.4% on year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CHF730k. When we examined a selection of companies with market caps ranging from CHF1.9b to CHF6.1b, we found the median CEO total compensation was CHF1.9m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 50% of total compensation represents salary, while the remainder of 50% is other remuneration. So it seems like there isn't a significant difference between Allreal Holding and the broader market, in terms of salary allocation in the overall compensation package.

At first glance this seems like a real positive for shareholders, since Roger Herzog is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business. You can see a visual representation of the CEO compensation at Allreal Holding, below.

SWX:ALLN CEO Compensation March 30th 2020

Is Allreal Holding AG Growing?

Allreal Holding AG has seen earnings per share (EPS) move positively by an average of 9.4% a year, over the last three years (using a line of best fit). Its revenue is down 2.4% over last year.

I would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. You might want to check this free visual report on analyst forecasts for future earnings.

Has Allreal Holding AG Been A Good Investment?

Allreal Holding AG has served shareholders reasonably well, with a total return of 18% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Allreal Holding AG is currently paying its CEO below what is normal for companies of its size.

Roger Herzog receives relatively low remuneration compared to similar sized companies. But the company isn't exactly firing on all cylinders, from my perspective. However I do not find the CEO compensation to be concerning. Taking a breather from CEO compensation, we've spotted 4 warning signs for Allreal Holding (of which 2 can't be ignored!) you should know about in order to have a holistic understanding of the 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.

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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