Shareholders May Not Be So Generous With Klingelnberg AG's (VTX:KLIN) CEO Compensation And Here's Why

Key Insights

• Klingelnberg's Annual General Meeting to take place on 20th of August
• CEO Jan Klingelnberg's total compensation includes salary of €513.8k
• The total compensation is 68% higher than the average for the industry
• Over the past three years, Klingelnberg's EPS grew by 94% and over the past three years, the total loss to shareholders 9.7%

As many shareholders of Klingelnberg AG (VTX:KLIN) will be aware, they have not made a gain on their investment in the past three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 20th of August. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Klingelnberg

How Does Total Compensation For Jan Klingelnberg Compare With Other Companies In The Industry?

Our data indicates that Klingelnberg AG has a market capitalization of CHF144m, and total annual CEO compensation was reported as €985k for the year to March 2024. We note that's an increase of 17% above last year. We note that the salary of €513.8k makes up a sizeable portion of the total compensation received by the CEO.

On examining similar-sized companies in the Swiss Machinery industry with market capitalizations between CHF86m and CHF346m, we discovered that the median CEO total compensation of that group was €586k. This suggests that Jan Klingelnberg is paid more than the median for the industry. Furthermore, Jan Klingelnberg directly owns CHF326k worth of shares in the company.

Component	2024	2023	Proportion (2024)
Salary	€514k	€504k	52%
Other	€471k	€339k	48%
Total Compensation	€985k	€843k	100%

Speaking on an industry level, nearly 44% of total compensation represents salary, while the remainder of 56% is other remuneration. Klingelnberg is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Klingelnberg AG's Growth

Klingelnberg AG's earnings per share (EPS) grew 94% per year over the last three years. It saw its revenue drop 1.8% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Klingelnberg AG Been A Good Investment?

With a three year total loss of 9.7% for the shareholders, Klingelnberg AG would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Klingelnberg that investors should look into moving forward.

Switching gears from Klingelnberg, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.