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Is E.ON SE (FRA:EOAN) Overpaying Its CEO?

Simply Wall St

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Johannes Teyssen became the CEO of E.ON SE (FRA:EOAN) in 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. 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.

See our latest analysis for E.ON

How Does Johannes Teyssen's Compensation Compare With Similar Sized Companies?

According to our data, E.ON SE has a market capitalization of €20b, and pays its CEO total annual compensation worth €5.3m. (This is based on the year to December 2018). That's below the compensation, last year. While we always look at total compensation first, we note that the salary component is less, at €1.2m. We took a group of companies with market capitalizations over €7.1b, 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.

So Johannes Teyssen receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see a visual representation of the CEO compensation at E.ON, below.

DB:EOAN CEO Compensation, June 4th 2019

Is E.ON SE Growing?

E.ON SE has increased its earnings per share (EPS) by an average of 18% a year, over the last three years (using a line of best fit). In the last year, its revenue is down -16%.

This demonstrates that the company has been improving recently. A good result. While it would be good to see revenue growth, profits matter more in the end. You might want to check this free visual report on analyst forecasts for future earnings.

Has E.ON SE Been A Good Investment?

E.ON SE has generated a total shareholder return of 24% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Remuneration for Johannes Teyssen is close enough to the median pay for a CEO of a large company .

Shareholder returns could be better but shareholders would be pleased with the positive EPS growth. As a result of these considerations, I would suggest the CEO pay is reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling E.ON shares (free trial).

Important note: E.ON 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.

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.