Why We Think RATIONAL Aktiengesellschaft's (ETR:RAA) CEO Compensation Is Not Excessive At All

Key Insights

• RATIONAL will host its Annual General Meeting on 8th of May
• Total pay for CEO Peter Stadelmann includes €1.33m salary
• The overall pay is comparable to the industry average
• RATIONAL's total shareholder return over the past three years was 9.2% while its EPS grew by 39% over the past three years

Under the guidance of CEO Peter Stadelmann, RATIONAL Aktiengesellschaft (ETR:RAA) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 8th of May. We present our case of why we think CEO compensation looks fair.

View our latest analysis for RATIONAL

Comparing RATIONAL Aktiengesellschaft's CEO Compensation With The Industry

Our data indicates that RATIONAL Aktiengesellschaft has a market capitalization of €9.1b, and total annual CEO compensation was reported as €2.3m for the year to December 2023. This means that the compensation hasn't changed much from last year. Notably, the salary which is €1.33m, represents a considerable chunk of the total compensation being paid.

On comparing similar companies in the German Machinery industry with market capitalizations above €7.5b, we found that the median total CEO compensation was €3.2m. So it looks like RATIONAL compensates Peter Stadelmann in line with the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	€1.3m	€1.2m	58%
Other	€958k	€1.0m	42%
Total Compensation	€2.3m	€2.2m	100%

Speaking on an industry level, nearly 53% of total compensation represents salary, while the remainder of 47% is other remuneration. RATIONAL is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at RATIONAL Aktiengesellschaft's Growth Numbers

RATIONAL Aktiengesellschaft has seen its earnings per share (EPS) increase by 39% a year over the past three years. In the last year, its revenue is up 10%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has RATIONAL Aktiengesellschaft Been A Good Investment?

RATIONAL Aktiengesellschaft has not done too badly by shareholders, with a total return of 9.2%, over three years. It would be nice to see that metric improve in the future. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for RATIONAL that investors should look into moving forward.

Important note: RATIONAL 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.