In 2013 Armin Papperger was appointed CEO of Rheinmetall AG (ETR:RHM). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Armin Papperger's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Rheinmetall AG has a market cap of €4.2b, and reported total annual CEO compensation of €5.7m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at €1.2m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from €1.8b to €5.8b, we found the median CEO total compensation was €2.3m.
It would therefore appear that Rheinmetall AG pays Armin Papperger 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 better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Rheinmetall has changed over time.
Is Rheinmetall AG Growing?
Rheinmetall AG has increased its earnings per share (EPS) by an average of 20% a year, over the last three years (using a line of best fit). Its revenue is up 6.7% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. You might want to check this free visual report on analyst forecasts for future earnings.
Has Rheinmetall AG Been A Good Investment?
Boasting a total shareholder return of 62% over three years, Rheinmetall AG has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount Rheinmetall AG pays its CEO, and compared it to the amount paid by similar sized companies. 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. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. So you may want to check if insiders are buying Rheinmetall shares with their own money (free access).
If you want to buy a stock that is better than Rheinmetall, this free list of high return, low debt companies is a great place to look.
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