In 2011 Heinz Fuhrmann was appointed CEO of Salzgitter AG (ETR:SZG). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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 Heinz Fuhrmann's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Salzgitter AG has a market cap of €821m, and reported total annual CEO compensation of €2.5m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €1.1m. We looked at a group of companies with market capitalizations from €362m to €1.4b, and the median CEO total compensation was €1.2m.
As you can see, Heinz Fuhrmann is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Salzgitter AG is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Salzgitter has changed from year to year.
Is Salzgitter AG Growing?
Over the last three years Salzgitter AG has grown its earnings per share (EPS) by an average of 41% per year (using a line of best fit). In the last year, its revenue is down 1.4%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. You might want to check this free visual report on analyst forecasts for future earnings.
Has Salzgitter AG Been A Good Investment?
Since shareholders would have lost about 57% over three years, some Salzgitter AG shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by Salzgitter 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. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. So you may want to check if insiders are buying Salzgitter 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.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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