We Take A Look At Why Rheinmetall AG's (ETR:RHM) CEO Has Earned Their Pay Packet

Key Insights

• Rheinmetall will host its Annual General Meeting on 9th of May
• Salary of €1.30m is part of CEO Armin Papperger's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, Rheinmetall's EPS grew by 11% and over the past three years, the total shareholder return was 369%

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. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 9th of May. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

Check out our latest analysis for Rheinmetall

Comparing Rheinmetall AG's CEO Compensation With The Industry

At the time of writing, our data shows that Rheinmetall AG has a market capitalization of €12b, and reported total annual CEO compensation of €3.6m for the year to December 2022. Notably, that's a decrease of 42% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.3m.

In comparison with other companies in the German Aerospace & Defense industry with market capitalizations over €7.3b, the reported median total CEO compensation was €3.3m. So it looks like Rheinmetall compensates Armin Papperger in line with the median for the industry.

Component	2022	2021	Proportion (2022)
Salary	€1.3m	€1.3m	36%
Other	€2.3m	€4.9m	64%
Total Compensation	€3.6m	€6.1m	100%

On an industry level, roughly 43% of total compensation represents salary and 57% is other remuneration. In Rheinmetall's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Rheinmetall AG's Growth

Rheinmetall AG has seen its earnings per share (EPS) increase by 11% a year over the past three years. Its revenue is up 13% 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. 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 Rheinmetall AG Been A Good Investment?

We think that the total shareholder return of 369%, over three years, would leave most Rheinmetall AG shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in 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 pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which is concerning) in Rheinmetall we think you should know about.

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.