We Discuss Why Deutsche Pfandbriefbank AG's (ETR:PBB) CEO Compensation May Be Closely Reviewed

By
Simply Wall St
Published
May 04, 2021
XTRA:PBB

Shareholders will probably not be too impressed with the underwhelming results at Deutsche Pfandbriefbank AG (ETR:PBB) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 12 May 2021. 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 Deutsche Pfandbriefbank

Comparing Deutsche Pfandbriefbank AG's CEO Compensation With the industry

At the time of writing, our data shows that Deutsche Pfandbriefbank AG has a market capitalization of €1.3b, and reported total annual CEO compensation of €1.6m for the year to December 2020. That's a notable increase of 13% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €500k.

For comparison, other companies in the same industry with market capitalizations ranging between €829m and €2.7b had a median total CEO compensation of €1.9m. From this we gather that Andreas Arndt is paid around the median for CEOs in the industry.

Component20202019Proportion (2020)
Salary €500k €500k 31%
Other €1.1m €935k 69%
Total Compensation€1.6m €1.4m100%

On an industry level, around 58% of total compensation represents salary and 42% is other remuneration. It's interesting to note that Deutsche Pfandbriefbank allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
XTRA:PBB CEO Compensation May 5th 2021

A Look at Deutsche Pfandbriefbank AG's Growth Numbers

Deutsche Pfandbriefbank AG has reduced its earnings per share by 18% a year over the last three years. In the last year, its revenue is down 12%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Deutsche Pfandbriefbank AG Been A Good Investment?

Since shareholders would have lost about 17% over three years, some Deutsche Pfandbriefbank AG investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid 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 it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Deutsche Pfandbriefbank that you should be aware of before investing.

Switching gears from Deutsche Pfandbriefbank, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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