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Is Heidelberger Druckmaschinen Aktiengesellschaft (ETR:HDD) Overpaying Its CEO?

Simply Wall St

In 2016 Rainer Hundsdörfer was appointed CEO of Heidelberger Druckmaschinen Aktiengesellschaft (ETR:HDD). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Heidelberger Druckmaschinen

How Does Rainer Hundsdörfer's Compensation Compare With Similar Sized Companies?

According to our data, Heidelberger Druckmaschinen Aktiengesellschaft has a market capitalization of €345m, and paid its CEO total annual compensation worth €2.0m over the year to March 2019. While we always look at total compensation first, we note that the salary component is less, at €660k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of €182m to €727m. The median total CEO compensation was €739k.

It would therefore appear that Heidelberger Druckmaschinen Aktiengesellschaft pays Rainer Hundsdörfer more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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.

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

XTRA:HDD CEO Compensation, October 11th 2019

Is Heidelberger Druckmaschinen Aktiengesellschaft Growing?

Over the last three years Heidelberger Druckmaschinen Aktiengesellschaft has shrunk its earnings per share by an average of 3.6% per year (measured with a line of best fit). It saw its revenue drop 1.2% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has Heidelberger Druckmaschinen Aktiengesellschaft Been A Good Investment?

Since shareholders would have lost about 47% over three years, some Heidelberger Druckmaschinen Aktiengesellschaft shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We examined the amount Heidelberger Druckmaschinen Aktiengesellschaft pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us. Just as bad, share price gains for investors have failed to materialize, over the same period. 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 Heidelberger Druckmaschinen (free visualization of insider trades).

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.

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.