How Is Covestro's (ETR:1COV) CEO Compensated?

Markus Steilemann has been the CEO of Covestro AG (ETR:1COV) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Covestro pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Covestro

Comparing Covestro AG's CEO Compensation With the industry

According to our data, Covestro AG has a market capitalization of €9.8b, and paid its CEO total annual compensation worth €4.3m over the year to December 2019. That's a notable increase of 21% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at €1.2m.

In comparison with other companies in the industry with market capitalizations over €6.5b , the reported median total CEO compensation was €3.8m. So it looks like Covestro compensates Markus Steilemann in line with the median for the industry.

Talking in terms of the industry, salary represented approximately 28% of total compensation out of all the companies we analyzed, while other remuneration made up 72% of the pie. Covestro is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Covestro AG's Growth Numbers

Over the last three years, Covestro AG has shrunk its earnings per share by 49% per year. It saw its revenue drop 18% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. 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 Covestro AG Been A Good Investment?

With a three year total loss of 36% for the shareholders, Covestro AG would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Markus is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 5 warning signs for Covestro that investors should be aware of in a dynamic business environment.

Switching gears from Covestro, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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