In 2016 Werner Baumann was appointed CEO of Bayer Aktiengesellschaft (ETR:BAYN). This analysis aims first to contrast CEO compensation with other large companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Werner Baumann’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Bayer Aktiengesellschaft has a market cap of €72b, and reported total annual CEO compensation of €6.4m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at €1.5m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations over €7.2b and the median CEO total compensation was €4.0m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
As you can see, Werner Baumann is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Bayer Aktiengesellschaft is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Bayer has changed over time.
Is Bayer Aktiengesellschaft Growing?
Bayer Aktiengesellschaft has reduced its earnings per share by an average of 46% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 31% over the last year.
Investors should note that, over three years, earnings per share are down. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching. Shareholders might be interested in this free visualization of analyst forecasts.
Has Bayer Aktiengesellschaft Been A Good Investment?
Given the total loss of 20% over three years, many shareholders in Bayer Aktiengesellschaft are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We examined the amount Bayer Aktiengesellschaft pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Shareholders may wish to consider further research. Although we don’t think the CEO pay is too high, it is probably more on the generous side of things. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Bayer.
Important note: Bayer may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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