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Should You Worry About Fresenius Medical Care AG Co. KGaA's (ETR:FME) CEO Pay Cheque?

Simply Wall St

Rice Powell became the CEO of Fresenius Medical Care AG & Co. KGaA (ETR:FME) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Fresenius Medical Care KGaA

How Does Rice Powell's Compensation Compare With Similar Sized Companies?

According to our data, Fresenius Medical Care AG & Co. KGaA has a market capitalization of €19b, and pays its CEO total annual compensation worth €6.6m. (This figure is for the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at €1.3m. We took a group of companies with market capitalizations over €7.3b, and calculated the median CEO total compensation to be €4.1m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

As you can see, Rice Powell is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Fresenius Medical Care AG & Co. KGaA is paying too much. 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 Fresenius Medical Care KGaA has changed over time.

XTRA:FME CEO Compensation, September 6th 2019

Is Fresenius Medical Care AG & Co. KGaA Growing?

Over the last three years Fresenius Medical Care AG & Co. KGaA has grown its earnings per share (EPS) by an average of 20% per year (using a line of best fit). In the last year, its revenue changed by just -0.7%.

This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.

Has Fresenius Medical Care AG & Co. KGaA Been A Good Investment?

Since shareholders would have lost about 20% over three years, some Fresenius Medical Care AG & Co. KGaA shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Fresenius Medical Care AG & Co. KGaA with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.

However, the earnings per share growth over three years is certainly impressive. 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 Fresenius Medical Care KGaA shares with their own money (free access).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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. Thank you for reading.