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Does Deutsche Telekom AG’s (FRA:DTE) CEO Pay Compare Well With Peers?

Kristin Rankin

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Tim Höttges has been the CEO of Deutsche Telekom AG (FRA:DTE) since 2014. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Deutsche Telekom

How Does Tim Höttges’s Compensation Compare With Similar Sized Companies?

According to our data, Deutsche Telekom AG has a market capitalization of €67b, and pays its CEO total annual compensation worth €4.0m. (This is based on the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at €1.5m. When we examined a group of companies with market caps over €7.0b, we found that their median CEO compensation was €3.9m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

So Tim Höttges is paid around the average of the companies we looked at. 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 Deutsche Telekom, below.

DB:DTE CEO Compensation February 4th 19

Is Deutsche Telekom AG Growing?

Over the last three years Deutsche Telekom AG has shrunk its earnings per share by an average of 13% per year (measured with a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Deutsche Telekom AG Been A Good Investment?

Deutsche Telekom AG has generated a total shareholder return of 6.7% over three years, so most shareholders wouldn’t be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

Tim Höttges is paid around the same as most CEOs of large companies.

The company isn’t growing earnings per share, and nor have the total returns inspired us. We do not think the CEO pay is a problem, but we’d venture the company should look to improve its business metrics (and share price) before paying any more. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Deutsche Telekom.

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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.