Martin Richenhagen became the CEO of AGCO Corporation (NYSE:AGCO) in 2004. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Martin Richenhagen’s Compensation Compare With Similar Sized Companies?
Our data indicates that AGCO Corporation is worth US$4.4b, and total annual CEO compensation is US$15m. (This number is for the twelve months until 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.3m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$5.1m.
It would therefore appear that AGCO Corporation pays Martin Richenhagen 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at AGCO has changed from year to year.
Is AGCO Corporation Growing?
On average over the last three years, AGCO Corporation has shrunk earnings per share by 1.2% each year. It achieved revenue growth of 18% over the last year.
The lack of earnings per share growth in the last three years is unimpressive. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.
You might want to check this free visual report on analyst forecasts for future earnings.
Has AGCO Corporation Been A Good Investment?
AGCO Corporation has served shareholders reasonably well, with a total return of 18% over three years. 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.
We compared total CEO remuneration at AGCO Corporation 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.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
And shareholder returns are decent but not great. So we doubt many shareholders would consider the CEO pay to be particularly modest! Shareholders may want to check for free if AGCO insiders are buying or selling shares.
Or you might prefer examine intently this intuitive graph showing past earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.