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Is ElringKlinger AG’s (FRA:ZIL2) CEO Salary Justified?

In 2006 Stefan Wolf was appointed CEO of ElringKlinger AG (FRA:ZIL2). 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for ElringKlinger

How Does Stefan Wolf’s Compensation Compare With Similar Sized Companies?

According to our data, ElringKlinger AG has a market capitalization of €501m, and pays its CEO total annual compensation worth €2m. That’s a fairly small increase of 0.05% on year before. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of €176m to €703m. The median total CEO compensation was €680k.

As you can see, Stefan Wolf is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean ElringKlinger AG is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

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

DB:ZIL2 CEO Compensation November 5th 18
DB:ZIL2 CEO Compensation November 5th 18

Is ElringKlinger AG Growing?

On average over the last three years, ElringKlinger AG has shrunk earnings per share by 11% each year. In the last year, its revenue is up 3.8%.

Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.

You might want to check this free visual report on analyst forecasts for future earnings.

Has ElringKlinger AG Been A Good Investment?

With a three year total loss of 59%, ElringKlinger AG would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared total CEO remuneration at ElringKlinger AG with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling ElringKlinger AG (free visualization of insider trades).

Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.

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.