Increases to SYNLAB AG's (ETR:SYAB) CEO Compensation Might Cool off for now

Key Insights

• SYNLAB will host its Annual General Meeting on 17th of May
• CEO Mathieu Floreani's total compensation includes salary of €1.00m
• The overall pay is 37% above the industry average
• Over the past three years, SYNLAB's EPS grew by 150% and over the past three years, the total loss to shareholders 44%

In the past three years, the share price of SYNLAB AG (ETR:SYAB) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 17th of May. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for SYNLAB

How Does Total Compensation For Mathieu Floreani Compare With Other Companies In The Industry?

According to our data, SYNLAB AG has a market capitalization of €2.3b, and paid its CEO total annual compensation worth €2.4m over the year to December 2023. Notably, that's a decrease of 14% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €1.0m.

On examining similar-sized companies in the German Healthcare industry with market capitalizations between €1.9b and €5.9b, we discovered that the median CEO total compensation of that group was €1.8m. Hence, we can conclude that Mathieu Floreani is remunerated higher than the industry median.

Component	2023	2022	Proportion (2023)
Salary	€1.0m	€1.0m	42%
Other	€1.4m	€1.8m	58%
Total Compensation	€2.4m	€2.8m	100%

Talking in terms of the industry, salary represented approximately 42% of total compensation out of all the companies we analyzed, while other remuneration made up 58% of the pie. Although there is a difference in how total compensation is set, SYNLAB more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at SYNLAB AG's Growth Numbers

SYNLAB AG has seen its earnings per share (EPS) increase by 150% a year over the past three years. It saw its revenue drop 19% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in 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 SYNLAB AG Been A Good Investment?

With a total shareholder return of -44% over three years, SYNLAB AG shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for SYNLAB that investors should think about before committing capital to this stock.

Important note: SYNLAB is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.