Why We Think alstria office REIT-AG's (ETR:AOX) CEO Compensation Is Not Excessive At All

The share price of alstria office REIT-AG (ETR:AOX) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 06 May 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for alstria office REIT-AG

Comparing alstria office REIT-AG's CEO Compensation With the industry

Our data indicates that alstria office REIT-AG has a market capitalization of €2.6b, and total annual CEO compensation was reported as €1.2m for the year to December 2020. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €440k.

For comparison, other companies in the same industry with market capitalizations ranging between €1.7b and €5.3b had a median total CEO compensation of €1.3m. So it looks like alstria office REIT-AG compensates Olivier Elamine in line with the median for the industry.

Component	2020	2019	Proportion (2020)
Salary	€440k	€440k	36%
Other	€786k	€789k	64%
Total Compensation	€1.2m	€1.2m	100%

Speaking on an industry level, nearly 62% of total compensation represents salary, while the remainder of 38% is other remuneration. alstria office REIT-AG sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at alstria office REIT-AG's Growth Numbers

Over the last three years, alstria office REIT-AG has shrunk its funds from operations (FFO) by 1.5% per year. In the last year, its revenue is down 4.0%.

A lack of FFO improvement is not good to see. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has alstria office REIT-AG Been A Good Investment?

With a total shareholder return of 29% over three years, alstria office REIT-AG shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is a bit unpleasant) in alstria office REIT-AG we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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