Is Renk Aktiengesellschaft’s (FRA:ZAR) CEO Pay Fair?
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Florian Hofbauer has been the CEO of Renk Aktiengesellschaft (FRA:ZAR) since 2007. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Renk
How Does Florian Hofbauer’s Compensation Compare With Similar Sized Companies?
According to our data, Renk Aktiengesellschaft has a market capitalization of €632m, and pays its CEO total annual compensation worth €514k. (This figure is for the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at €255k. When we examined a selection of companies with market caps ranging from €354m to €1.4b, we found the median CEO compensation was €1.2m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it’s important we delve into the performance of the actual business.
You can see a visual representation of the CEO compensation at Renk, below.
Is Renk Aktiengesellschaft Growing?
Over the last three years Renk Aktiengesellschaft has shrunk its earnings per share by an average of 9.4% per year (measured with a line of best fit). It saw its revenue drop -6.1% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Renk Aktiengesellschaft Been A Good Investment?
Since shareholders would have lost about 2.8% over three years, some Renk Aktiengesellschaft shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary…
Renk Aktiengesellschaft is currently paying its CEO below what is normal for companies of its size.
Florian Hofbauer is paid less than CEOs of similar size companies, but the company isn’t growing and total shareholder returns have been disappointing. Considering all these factors, we’d stop short of saying the CEO pay is too high, but we don’t think shareholders would want to see a pay rise before business performance improves. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Renk (free visualization of insider trades).
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. On rare occasion, data errors may occur. Thank you for reading.
