We Discuss Why INDUS Holding AG's (ETR:INH) CEO Compensation May Be Closely Reviewed

Simply Wall St
May 19, 2021
Source: Shutterstock

INDUS Holding AG (ETR:INH) has not performed well recently and CEO Johannes Schmidt will probably need to up their game. At the upcoming AGM on 26 May 2021, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for INDUS Holding

Comparing INDUS Holding AG's CEO Compensation With the industry

At the time of writing, our data shows that INDUS Holding AG has a market capitalization of €912m, and reported total annual CEO compensation of €928k for the year to December 2020. That is, the compensation was roughly the same as last year. Notably, the salary which is €540.0k, represents a considerable chunk of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from €327m to €1.3b, we found that the median CEO total compensation was €1.2m. So it looks like INDUS Holding compensates Johannes Schmidt in line with the median for the industry.

Component20202019Proportion (2020)
Salary €540k €540k 58%
Other €388k €395k 42%
Total Compensation€928k €935k100%

On an industry level, roughly 29% of total compensation represents salary and 71% is other remuneration. It's interesting to note that INDUS Holding pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

XTRA:INH CEO Compensation May 20th 2021

A Look at INDUS Holding AG's Growth Numbers

INDUS Holding AG has reduced its earnings per share by 78% a year over the last three years. Its revenue is down 9.4% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 INDUS Holding AG Been A Good Investment?

With a total shareholder return of -36% over three years, INDUS Holding AG shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

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, the board will get the chance to explain the steps it plans to take to improve business performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for INDUS Holding you should be aware of, and 1 of them is a bit concerning.

Switching gears from INDUS Holding, 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.

If you decide to trade INDUS Holding, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.