Is adidas AG (FRA:ADS) Overpaying Its CEO?

Kasper Rorsted became the CEO of adidas AG (FRA:ADS) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. 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.

Check out our latest analysis for adidas

How Does Kasper Rorsted's Compensation Compare With Similar Sized Companies?

Our data indicates that adidas AG is worth €57b, and total annual CEO compensation is €6.8m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €2.0m. We looked at a group of companies with market capitalizations over €7.2b and the median CEO total compensation was €4.3m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

As you can see, Kasper Rorsted is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean adidas AG is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at adidas, below.

Is adidas AG Growing?

Over the last three years adidas AG has grown its earnings per share (EPS) by an average of 23% per year (using a line of best fit). It achieved revenue growth of 4.4% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy.

Has adidas AG Been A Good Investment?

Boasting a total shareholder return of 96% over three years, adidas AG has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We compared total CEO remuneration at adidas AG with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. Whatever your view on compensation, you might want to check if insiders are buying or selling adidas shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.