Is Turbon AG’s (FRA:TUR) CEO Pay Justified?

Holger Brückmann-Turbon is the CEO of Turbon AG (FRA:TUR). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. 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.

Check out our latest analysis for Turbon

How Does Holger Brückmann-Turbon’s Compensation Compare With Similar Sized Companies?

Our data indicates that Turbon AG is worth €8.6m, and total annual CEO compensation was reported as €62k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at €54k. We looked at a group of companies with market capitalizations under €175m, and the median CEO total compensation was €386k.

A first glance this seems like a real positive for shareholders, since Holger Brückmann-Turbon is paid less than the average total compensation paid by similar sized companies. Though positive, it’s important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at Turbon has changed from year to year.

DB:TUR CEO Compensation, March 10th 2020
DB:TUR CEO Compensation, March 10th 2020

Is Turbon AG Growing?

On average over the last three years, Turbon AG has shrunk earnings per share by 100% each year (measured with a line of best fit). In the last year, its revenue is up 5.0%.

Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Although we don’t have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Turbon AG Been A Good Investment?

Since shareholders would have lost about 82% over three years, some Turbon AG shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

Turbon AG is currently paying its CEO below what is normal for companies of its size.

Shareholders should note that compensation for Holger Brückmann-Turbon is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. Taking a breather from CEO compensation, we’ve spotted 4 warning signs for Turbon (of which 3 are potentially serious!) you should know about in order to have a holistic understanding of the stock.

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.

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.

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