Martin Zielke has been the CEO of Commerzbank AG (ETR:CBK) since 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Martin Zielke's Compensation Compare With Similar Sized Companies?
According to our data, Commerzbank AG has a market capitalization of €4.1b, and paid its CEO total annual compensation worth €4.4m over the year to December 2019. Notably, that's an increase of 40% over the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €1.7m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from €1.8b to €5.9b, and discovered that the median CEO total compensation of that group was €2.5m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Commerzbank stands. On an industry level, roughly 67% of total compensation represents salary and 33% is other remuneration. It's interesting to note that Commerzbank allocates a smaller portion of compensation to salary in comparison to the broader industry.
Thus we can conclude that Martin Zielke receives more in total compensation than the median of a group of companies in the same market, and of similar size to Commerzbank 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. You can see, below, how CEO compensation at Commerzbank has changed over time.
Is Commerzbank AG Growing?
Over the last three years Commerzbank AG has seen earnings per share (EPS) move in a positive direction by an average of 45% per year (using a line of best fit). In the last year, its revenue is down 6.6%.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Commerzbank AG Been A Good Investment?
Given the total loss of 65% over three years, many shareholders in Commerzbank AG are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by Commerzbank AG, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. This doesn't look great when you consider CEO remuneration is up on last year. Considering positive per-share earnings movement, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Moving away from CEO compensation for the moment, we've identified 2 warning signs for Commerzbank that you should be aware of before investing.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.