We Think Shareholders May Want To Consider A Review Of paragon GmbH & Co. KGaA's (ETR:PGN) CEO Compensation Package

Key Insights

• paragon GmbH KGaA to hold its Annual General Meeting on 12th of June
• Total pay for CEO Klaus Frers includes €600.0k salary
• The total compensation is 317% higher than the average for the industry
• paragon GmbH KGaA's EPS declined by 79% over the past three years while total shareholder loss over the past three years was 69%

paragon GmbH & Co. KGaA (ETR:PGN) has not performed well recently and CEO Klaus Frers will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 12th of June. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for paragon GmbH KGaA

Comparing paragon GmbH & Co. KGaA's CEO Compensation With The Industry

According to our data, paragon GmbH & Co. KGaA has a market capitalization of €16m, and paid its CEO total annual compensation worth €1.4m over the year to December 2023. Notably, that's an increase of 29% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at €600k.

In comparison with other companies in the German Auto Components industry with market capitalizations under €184m, the reported median total CEO compensation was €342k. This suggests that Klaus Frers is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	€600k	€600k	42%
Other	€828k	€505k	58%
Total Compensation	€1.4m	€1.1m	100%

On an industry level, around 37% of total compensation represents salary and 63% is other remuneration. According to our research, paragon GmbH KGaA has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at paragon GmbH & Co. KGaA's Growth Numbers

Over the last three years, paragon GmbH & Co. KGaA has shrunk its earnings per share by 79% per year. Its revenue is down 4.3% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. 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 might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has paragon GmbH & Co. KGaA Been A Good Investment?

With a total shareholder return of -69% over three years, paragon GmbH & Co. KGaA shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 3 which can't be ignored) in paragon GmbH KGaA we think you should know about.

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.