Most Shareholders Will Probably Find That The CEO Compensation For Evonik Industries AG (ETR:EVK) Is Reasonable

Despite Evonik Industries AG's (ETR:EVK) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. Some of these issues will occupy shareholders' minds as the AGM rolls around on 02 June 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Evonik Industries

How Does Total Compensation For Christian Kullmann Compare With Other Companies In The Industry?

Our data indicates that Evonik Industries AG has a market capitalization of €14b, and total annual CEO compensation was reported as €4.9m for the year to December 2020. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.4m.

For comparison, other companies in the industry with market capitalizations above €6.6b, reported a median total CEO compensation of €4.4m. So it looks like Evonik Industries compensates Christian Kullmann in line with the median for the industry.

Component	2020	2019	Proportion (2020)
Salary	€1.4m	€1.4m	28%
Other	€3.5m	€3.5m	72%
Total Compensation	€4.9m	€4.9m	100%

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. Evonik Industries is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Evonik Industries AG's Growth

Evonik Industries AG has reduced its earnings per share by 11% a year over the last three years. It saw its revenue drop 5.7% over the last year.

Few shareholders would be pleased to read that EPS have declined. 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 Evonik Industries AG Been A Good Investment?

With a total shareholder return of 7.0% over three years, Evonik Industries AG has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Evonik Industries that investors should look into moving forward.

Important note: Evonik Industries 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. 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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