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How Should Investors Feel About Renk Aktiengesellschaft's (FRA:ZAR) CEO Pay?

Simply Wall St

Florian Hofbauer became the CEO of Renk Aktiengesellschaft (FRA:ZAR) in 2007. First, this article will compare CEO compensation with compensation at similar sized companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Renk

How Does Florian Hofbauer's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Renk Aktiengesellschaft has a market cap of €728m, and reported total annual CEO compensation of €842k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at €270k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from €364m to €1.5b, and the median CEO total compensation was €1.1m.

So Florian Hofbauer 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, below, how CEO compensation at Renk has changed over time.

DB:ZAR CEO Compensation, October 4th 2019

Is Renk Aktiengesellschaft Growing?

On average over the last three years, Renk Aktiengesellschaft has shrunk earnings per share by 4.0% each year (measured with a line of best fit). Its revenue is up 7.6% over last year.

Unfortunately, earnings per share have trended lower over the last 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. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Renk Aktiengesellschaft Been A Good Investment?

Renk Aktiengesellschaft has generated a total shareholder return of 14% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

Remuneration for Florian Hofbauer is close enough to the median pay for a CEO of a similar sized company .

We feel that earnings per share have been a bit disappointing, but and we don't think the total returns are amazing. We wouldn't say the CEO pay is too high, but it's probably fair to say that many shareholders would like to see improved performance, before any pay rise occurs. So you may want to check if insiders are buying Renk shares with their own money (free access).

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.