We Discuss Why Grammer AG's (ETR:GMM) CEO Compensation May Be Closely Reviewed

Key Insights

• Grammer to hold its Annual General Meeting on 4th of June
• Total pay for CEO Jens Ohlenschlager includes €488.0k salary
• The total compensation is similar to the average for the industry
• Grammer's three-year loss to shareholders was 58% while its EPS was down 27% over the past three years

Grammer AG (ETR:GMM) has not performed well recently and CEO Jens Ohlenschlager will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 4th of June. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Grammer

How Does Total Compensation For Jens Ohlenschlager Compare With Other Companies In The Industry?

At the time of writing, our data shows that Grammer AG has a market capitalization of €154m, and reported total annual CEO compensation of €818k for the year to December 2023. Notably, that's an increase of 33% over the year before. In particular, the salary of €488.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the German Auto Components industry with market caps ranging from €92m to €368m, we found that the median CEO total compensation was €672k. From this we gather that Jens Ohlenschlager is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	€488k	€390k	60%
Other	€330k	€224k	40%
Total Compensation	€818k	€614k	100%

On an industry level, roughly 37% of total compensation represents salary and 63% is other remuneration. According to our research, Grammer has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Grammer AG's Growth Numbers

Grammer AG has reduced its earnings per share by 27% a year over the last three years. It achieved revenue growth of 1.8% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Grammer AG Been A Good Investment?

Few Grammer AG shareholders would feel satisfied with the return of -58% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Grammer that investors should be aware of in a dynamic business environment.

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.

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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.