We Take A Look At Why Rheinmetall AG's (ETR:RHM) CEO Compensation Is Well Earned

Key Insights

• Rheinmetall will host its Annual General Meeting on 14th of May
• CEO Armin Papperger's total compensation includes salary of €1.30m
• Total compensation is similar to the industry average
• Rheinmetall's total shareholder return over the past three years was 555% while its EPS grew by 31% over the past three years

It would be hard to discount the role that CEO Armin Papperger has played in delivering the impressive results at Rheinmetall AG (ETR:RHM) recently. Coming up to the next AGM on 14th of May, shareholders would be keeping this in mind. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

Check out our latest analysis for Rheinmetall

How Does Total Compensation For Armin Papperger Compare With Other Companies In The Industry?

According to our data, Rheinmetall AG has a market capitalization of €23b, and paid its CEO total annual compensation worth €3.6m over the year to December 2023. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.3m.

For comparison, other companies in the German Aerospace & Defense industry with market capitalizations above €7.4b, reported a median total CEO compensation of €2.9m. So it looks like Rheinmetall compensates Armin Papperger in line with the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	€1.3m	€1.3m	36%
Other	€2.3m	€2.3m	64%
Total Compensation	€3.6m	€3.6m	100%

Speaking on an industry level, nearly 49% of total compensation represents salary, while the remainder of 51% is other remuneration. Rheinmetall pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Rheinmetall AG's Growth

Rheinmetall AG has seen its earnings per share (EPS) increase by 31% a year over the past three years. Its revenue is up 12% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Rheinmetall AG Been A Good Investment?

We think that the total shareholder return of 555%, over three years, would leave most Rheinmetall AG shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Rheinmetall (free visualization of insider trades).

Switching gears from Rheinmetall, 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. 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.