Increases to CEO Compensation Might Be Put On Hold For Now at KION GROUP AG (ETR:KGX)

The share price of KION GROUP AG (ETR:KGX) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 11 May 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for KION GROUP

How Does Total Compensation For Koln Riske Compare With Other Companies In The Industry?

According to our data, KION GROUP AG has a market capitalization of €11b, and paid its CEO total annual compensation worth €4.1m over the year to December 2020. We note that's a small decrease of 7.3% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.4m.

In comparison with other companies in the industry with market capitalizations over €6.6b , the reported median total CEO compensation was €3.0m. This suggests that Koln Riske is paid more than the median for the industry.

Component	2020	2019	Proportion (2020)
Salary	€1.4m	€1.4m	34%
Other	€2.7m	€3.1m	66%
Total Compensation	€4.1m	€4.5m	100%

Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. It's interesting to note that KION GROUP allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

KION GROUP AG's Growth

Over the last three years, KION GROUP AG has shrunk its earnings per share by 16% per year. In the last year, its revenue changed by just 0.7%.

The decline in EPS is a bit concerning. And the flat revenue hardly impresses. 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 KION GROUP AG Been A Good Investment?

With a total shareholder return of 14% over three years, KION GROUP AG shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for KION GROUP that investors should think about before committing capital to this stock.

Important note: KION GROUP 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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