Increases to CEO Compensation Might Be Put On Hold For Now at BAWAG Group AG (VIE:BG)

The share price of BAWAG Group AG (VIE:BG) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 27 August 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for BAWAG Group

Comparing BAWAG Group AG's CEO Compensation With the industry

According to our data, BAWAG Group AG has a market capitalization of €4.3b, and paid its CEO total annual compensation worth €5.3m over the year to December 2020. That's just a smallish increase of 7.5% on last year. In particular, the salary of €3.99m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between €3.4b and €10b had a median total CEO compensation of €1.0m. Accordingly, our analysis reveals that BAWAG Group AG pays Anas Abuzaakouk north of the industry median.

Speaking on an industry level, nearly 75% of total compensation represents salary, while the remainder of 25% is other remuneration. Although there is a difference in how total compensation is set, BAWAG Group more or less reflects the market in terms of setting the salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

BAWAG Group AG's Growth

Over the last three years, BAWAG Group AG has shrunk its earnings per share by 5.7% per year. Its revenue is down 2.0% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has BAWAG Group AG Been A Good Investment?

BAWAG Group AG has generated a total shareholder return of 31% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at BAWAG Group.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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