Here's Why It's Unlikely That Biofrontera AG's (ETR:B8F) CEO Will See A Pay Rise This Year

Shareholders will probably not be too impressed with the underwhelming results at Biofrontera AG (ETR:B8F) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 14 December 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Biofrontera

How Does Total Compensation For Hermann Lubbert Compare With Other Companies In The Industry?

Our data indicates that Biofrontera AG has a market capitalization of €86m, and total annual CEO compensation was reported as €707k for the year to December 2020. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €322k.

In comparison with other companies in the industry with market capitalizations under €178m, the reported median total CEO compensation was €677k. This suggests that Biofrontera remunerates its CEO largely in line with the industry average. Furthermore, Hermann Lubbert directly owns €525k worth of shares in the company.

Component	2020	2019	Proportion (2020)
Salary	€322k	€350k	46%
Other	€385k	€369k	54%
Total Compensation	€707k	€719k	100%

On an industry level, roughly 46% of total compensation represents salary and 54% is other remuneration. Although there is a difference in how total compensation is set, Biofrontera 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 Biofrontera AG's Growth Numbers

Biofrontera AG has reduced its earnings per share by 23% a year over the last three years. In the last year, its revenue is down 15%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Biofrontera AG Been A Good Investment?

The return of -72% over three years would not have pleased Biofrontera AG shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Biofrontera that investors should be aware of in a dynamic business environment.

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.