Is ElringKlinger AG’s (FRA:ZIL2) CEO Pay Fair?

Stefan Wolf became the CEO of ElringKlinger AG (FRA:ZIL2) in 2006. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for ElringKlinger

How Does Stefan Wolf’s Compensation Compare With Similar Sized Companies?

Our data indicates that ElringKlinger AG is worth €310m, and total annual CEO compensation is €1.9m. (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 €558k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of €179m to €715m. The median total CEO compensation was €735k.

As you can see, Stefan Wolf is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean ElringKlinger AG is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

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

DB:ZIL2 CEO Compensation, August 6th 2019
DB:ZIL2 CEO Compensation, August 6th 2019

Is ElringKlinger AG Growing?

On average over the last three years, ElringKlinger AG has shrunk earnings per share by 25% each year (measured with a line of best fit). In the last year, its revenue is up 2.9%.

Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

Has ElringKlinger AG Been A Good Investment?

Given the total loss of 69% over three years, many shareholders in ElringKlinger AG are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared the total CEO remuneration paid by ElringKlinger AG, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Just as bad, share price gains for investors have failed to materialize, over the same period. Some might well form the view that the CEO is paid too generously! So you may want to check if insiders are buying ElringKlinger shares with their own money (free access).

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.