Matthias Zachert became the CEO of LANXESS Aktiengesellschaft (ETR:LXS) in 2014. 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 Matthias Zachert's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that LANXESS Aktiengesellschaft has a market cap of €3.7b, and reported total annual CEO compensation of €6.0m for the year to December 2019. Notably, that's an increase of 8.4% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at €1.3m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from €1.8b to €5.9b, and discovered that the median CEO total compensation of that group was €2.7m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where LANXESS stands. Talking in terms of the sector, salary represented approximately 28% of total compensation out of all the companies we analysed, while other remuneration made up 72% of the pie. So it seems like there isn't a significant difference between LANXESS and the broader market, in terms of salary allocation in the overall compensation package.
It would therefore appear that LANXESS Aktiengesellschaft pays Matthias Zachert 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. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. You can see, below, how CEO compensation at LANXESS has changed over time.
Is LANXESS Aktiengesellschaft Growing?
LANXESS Aktiengesellschaft has seen earnings per share (EPS) move positively by an average of 32% a year, over the last three years (using a line of best fit). In the last year, its revenue changed by just 0.3%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Revenue growth is a real positive for growth, but ultimately profits are more important. Shareholders might be interested in this free visualization of analyst forecasts.
Has LANXESS Aktiengesellschaft Been A Good Investment?
Since shareholders would have lost about 29% over three years, some LANXESS Aktiengesellschaft shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at LANXESS Aktiengesellschaft with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. So shareholders might not feel great about the fact that CEO pay increased on last year. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. On another note, we've spotted 4 warning signs for LANXESS that investors should look into moving forward.
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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