Does Deutsche Telekom AG's (ETR:DTE) CEO Pay Reflect Performance?
Tim Höttges became the CEO of Deutsche Telekom AG (ETR:DTE) in 2014. This analysis aims first to contrast CEO compensation with other large 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.
Check out our latest analysis for Deutsche Telekom
How Does Tim Höttges's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Deutsche Telekom AG has a market cap of €74b, and reported total annual CEO compensation of €5.8m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at €1.5m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We took a group of companies with market capitalizations over €7.2b, and calculated the median CEO total compensation to be €4.3m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Thus we can conclude that Tim Höttges receives more in total compensation than the median of a group of large companies in the same market as Deutsche Telekom AG. 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 Deutsche Telekom has changed from year to year.
Is Deutsche Telekom AG Growing?
On average over the last three years, Deutsche Telekom AG has shrunk earnings per share by 16% each year (measured with a line of best fit). In the last year, its revenue is up 6.5%.
Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn't much comfort against the reduced 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 Deutsche Telekom AG Been A Good Investment?
Deutsche Telekom AG has served shareholders reasonably well, with a total return of 21% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
We compared the total CEO remuneration paid by Deutsche Telekom AG, and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. And shareholder returns are decent but not great. So you may want to delve deeper, because we don't think the CEO pay is too low. So you may want to check if insiders are buying Deutsche Telekom shares with their own money (free access).
If you want to buy a stock that is better than Deutsche Telekom, this free list of high return, low debt companies is a great place to look.
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.
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. Thank you for reading.
