Is Krones AG’s (ETR:KRN) CEO Overpaid Relative To Its Peers?

Christoph Klenk has been the CEO of Krones AG (ETR:KRN) since 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Krones

How Does Christoph Klenk’s Compensation Compare With Similar Sized Companies?

According to our data, Krones AG has a market capitalization of €2.8b, and pays its CEO total annual compensation worth €1.9m. (This number is for the twelve months until December 2018). Notably, that’s an increase of 57% over the year before. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at €800k. We examined companies with market caps from €1.8b to €5.7b, and discovered that the median CEO total compensation of that group was €2.2m.

So Christoph Klenk receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

You can see, below, how CEO compensation at Krones has changed over time.

XTRA:KRN CEO Compensation, April 24th 2019
XTRA:KRN CEO Compensation, April 24th 2019

Is Krones AG Growing?

Krones AG has increased its earnings per share (EPS) by an average of 2.6% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 4.4%.

I would argue that the improvement in revenue isn’t particularly impressive, but it is good to see modest EPS growth. It’s clear the performance has been quite decent, but it it falls short of outstanding,based on this information. It could be important to check this free visual depiction of what analysts expect for the future.

Has Krones AG Been A Good Investment?

Since shareholders would have lost about 12% over three years, some Krones AG shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

Remuneration for Christoph Klenk is close enough to the median pay for a CEO of a similar sized company .

The company cannot boast particularly strong per share growth. And shareholder returns have been disappointing over the last three years. Shareholders might not feel great about the fact that CEO pay increased on last year. So it would take a bold person to suggest the pay is too modest. Shareholders may want to check for free if Krones insiders are buying or selling shares.

Important note: Krones may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.