We Think Verbio SE's (ETR:VBK) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Verbio to hold its Annual General Meeting on 2nd of February
• Salary of €768.0k is part of CEO Claus Sauter's total remuneration
• Total compensation is similar to the industry average
• Verbio's three-year loss to shareholders was 51% while its EPS was down 2.6% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Verbio SE (ETR:VBK) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 2nd of February. 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. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Verbio

How Does Total Compensation For Claus Sauter Compare With Other Companies In The Industry?

At the time of writing, our data shows that Verbio SE has a market capitalization of €1.2b, and reported total annual CEO compensation of €1.2m for the year to June 2023. That's just a smallish increase of 3.4% on last year. Notably, the salary which is €768.0k, represents most of the total compensation being paid.

On examining similar-sized companies in the German Oil and Gas industry with market capitalizations between €923m and €3.0b, we discovered that the median CEO total compensation of that group was €1.3m. From this we gather that Claus Sauter is paid around the median for CEOs in the industry. Moreover, Claus Sauter also holds €263m worth of Verbio stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	€768k	€768k	62%
Other	€464k	€423k	38%
Total Compensation	€1.2m	€1.2m	100%

Talking in terms of the industry, salary represented approximately 60% of total compensation out of all the companies we analyzed, while other remuneration made up 40% of the pie. Our data reveals that Verbio allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Verbio SE's Growth Numbers

Over the last three years, Verbio SE has shrunk its earnings per share by 2.6% per year. It saw its revenue drop 9.2% over the last year.

A lack of EPS improvement is not good to see. 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 Verbio SE Been A Good Investment?

The return of -51% over three years would not have pleased Verbio SE shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for Verbio you should be aware of, and 1 of them can't be ignored.

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.