What We Learned About ElringKlinger's (ETR:ZIL2) CEO Pay

Stefan Wolf became the CEO of ElringKlinger AG (ETR:ZIL2) in 2006, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether ElringKlinger pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for ElringKlinger

Comparing ElringKlinger AG's CEO Compensation With the industry

Our data indicates that ElringKlinger AG has a market capitalization of €906m, and total annual CEO compensation was reported as €1.6m for the year to December 2019. That's a notable decrease of 12% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at €556k.

For comparison, other companies in the same industry with market capitalizations ranging between €330m and €1.3b had a median total CEO compensation of €453k. Hence, we can conclude that Stefan Wolf is remunerated higher than the industry median.

On an industry level, around 35% of total compensation represents salary and 65% is other remuneration. Our data reveals that ElringKlinger allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ElringKlinger AG's Growth

Over the last three years, ElringKlinger AG has shrunk its earnings per share by 103% per year. Its revenue is down 17% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 ElringKlinger AG Been A Good Investment?

Given the total shareholder loss of 5.9% over three years, many shareholders in ElringKlinger AG are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, ElringKlinger pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for ElringKlinger (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: ElringKlinger is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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. 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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