Salzgitter AG's (ETR:SZG) CEO Will Probably Find It Hard To See A Huge Raise This Year

Key Insights

• Salzgitter to hold its Annual General Meeting on 29th of May
• CEO Gunnar Groebler's total compensation includes salary of €1.19m
• The total compensation is similar to the average for the industry
• Salzgitter's EPS grew by 4.4% over the past three years while total shareholder loss over the past three years was 7.0%

As many shareholders of Salzgitter AG (ETR:SZG) will be aware, they have not made a gain on their investment in the past three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 29th of May could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Salzgitter

How Does Total Compensation For Gunnar Groebler Compare With Other Companies In The Industry?

At the time of writing, our data shows that Salzgitter AG has a market capitalization of €1.2b, and reported total annual CEO compensation of €1.3m for the year to December 2023. We note that's a decrease of 29% compared to last year. Notably, the salary which is €1.19m, represents most of the total compensation being paid.

On examining similar-sized companies in the Germany Metals and Mining industry with market capitalizations between €924m and €3.0b, we discovered that the median CEO total compensation of that group was €1.3m. This suggests that Salzgitter remunerates its CEO largely in line with the industry average.

Component	2023	2022	Proportion (2023)
Salary	€1.2m	€1.1m	89%
Other	€144k	€744k	11%
Total Compensation	€1.3m	€1.9m	100%

Talking in terms of the industry, salary represented approximately 54% of total compensation out of all the companies we analyzed, while other remuneration made up 46% of the pie. Salzgitter pays out 89% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Salzgitter AG's Growth Numbers

Salzgitter AG has seen its earnings per share (EPS) increase by 4.4% a year over the past three years. In the last year, its revenue is down 14%.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Salzgitter AG Been A Good Investment?

Since shareholders would have lost about 7.0% over three years, some Salzgitter AG investors would surely be feeling negative emotions. 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. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Salzgitter 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.