Is Renk Aktiengesellschaft (FRA:ZAR) Overpaying Its CEO?

Florian Hofbauer became the CEO of Renk Aktiengesellschaft (FRA:ZAR) in 2007. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Renk

How Does Florian Hofbauer’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Renk Aktiengesellschaft has a market cap of €694m, and is paying total annual CEO compensation of €842k. (This figure is for the year to December 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at €270k. We looked at a group of companies with market capitalizations from €364m to €1.5b, and the median CEO total compensation was €1.1m.

That means Florian Hofbauer receives fairly typical remuneration for the CEO of a company that size. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at Renk, below.

DB:ZAR CEO Compensation, August 31st 2019
DB:ZAR CEO Compensation, August 31st 2019

Is Renk Aktiengesellschaft Growing?

Renk Aktiengesellschaft has reduced its earnings per share by an average of 4.0% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 7.6%.

Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

Has Renk Aktiengesellschaft Been A Good Investment?

With a total shareholder return of 7.9% over three years, Renk Aktiengesellschaft has done okay by shareholders. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

Florian Hofbauer is paid around what is normal the leaders of comparable size companies.

We’re not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We’re not saying the CEO pay is too generous, but it’s probably fair to say that many shareholders would like to see improved performance, before any pay rise occurs. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Renk (free visualization of insider trades).

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.