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Is Heidelberger Druckmaschinen Aktiengesellschaft's (FRA:HDD) CEO Paid Enough Relative To Peers?

Simply Wall St

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Rainer Hundsdörfer became the CEO of Heidelberger Druckmaschinen Aktiengesellschaft (FRA:HDD) in 2016. 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 - 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.

Check out 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 €411m, and pays its CEO total annual compensation worth €2.0m. (This number is for the twelve months until March 2019). That's below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at €660k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of €178m to €710m. The median total CEO compensation was €730k.

Thus we can conclude that Rainer Hundsdörfer receives more in total compensation than the median of a group of companies in the same market, and of similar size to Heidelberger Druckmaschinen Aktiengesellschaft. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Heidelberger Druckmaschinen has changed from year to year.

DB:HDD CEO Compensation, July 12th 2019

Is Heidelberger Druckmaschinen Aktiengesellschaft Growing?

Heidelberger Druckmaschinen Aktiengesellschaft has reduced its earnings per share by an average of 4.2% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 2.4% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Heidelberger Druckmaschinen Aktiengesellschaft Been A Good Investment?

Given the total loss of 47% over three years, many shareholders in Heidelberger Druckmaschinen Aktiengesellschaft are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared total CEO remuneration at Heidelberger Druckmaschinen Aktiengesellschaft 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.

We think many shareholders would be underwhelmed with the business growth over the last three years.

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! Shareholders may want to check for free if Heidelberger Druckmaschinen insiders are buying or selling shares.

Important note: Heidelberger Druckmaschinen 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.