Why Talanx's (ETR:TLX) CEO Pay Matters

This article will reflect on the compensation paid to Torsten Leue who has served as CEO of Talanx AG (ETR:TLX) since 2018. This analysis will also assess whether Talanx pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Talanx

How Does Total Compensation For Torsten Leue Compare With Other Companies In The Industry?

According to our data, Talanx AG has a market capitalization of €8.0b, and paid its CEO total annual compensation worth €2.8m over the year to December 2019. We note that's a decrease of 27% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €850k.

On comparing similar companies from the same industry with market caps ranging from €3.4b to €10b, we found that the median CEO total compensation was €2.0m. Accordingly, our analysis reveals that Talanx AG pays Torsten Leue north of the industry median.

On an industry level, around 40% of total compensation represents salary and 60% is other remuneration. Talanx sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Talanx AG's Growth Numbers

Over the last three years, Talanx AG has not seen its earnings per share change much, though they have deteriorated slightly. Its revenue is up 7.5% over the last year.

A lack of EPS improvement is not good to see. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Talanx AG Been A Good Investment?

With a total shareholder return of 5.4% over three years, Talanx AG has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As we noted earlier, Talanx pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, EPS has not grown in three years, failing to impress us. And shareholder returns are decent but not great. So we think more research is needed, but we don't think the CEO is underpaid.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Talanx that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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. 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.
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