We Think TUI AG's (ETR:TUI1) CEO Compensation Package Needs To Be Put Under A Microscope

TUI AG (ETR:TUI1) has not performed well recently and CEO Fritz Joussen will probably need to up their game. At the upcoming AGM on 08 February 2022, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for TUI

Comparing TUI AG's CEO Compensation With the industry

Our data indicates that TUI AG has a market capitalization of €3.5b, and total annual CEO compensation was reported as €1.7m for the year to September 2021. That's mostly flat as compared to the prior year's compensation. In particular, the salary of €1.10m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between €1.8b and €5.7b had a median total CEO compensation of €828k. Hence, we can conclude that Fritz Joussen is remunerated higher than the industry median.

Component	2021	2020	Proportion (2021)
Salary	€1.1m	€1.0m	63%
Other	€645k	€665k	37%
Total Compensation	€1.7m	€1.7m	100%

Talking in terms of the industry, salary represented approximately 58% of total compensation out of all the companies we analyzed, while other remuneration made up 42% of the pie. There isn't a significant difference between TUI and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at TUI AG's Growth Numbers

Over the last three years, TUI AG has shrunk its earnings per share by 108% per year. Its revenue is down 40% over the previous year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has TUI AG Been A Good Investment?

Few TUI AG shareholders would feel satisfied with the return of -50% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for TUI (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

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

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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.