We Think Ceconomy AG's (ETR:CEC) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Ceconomy's Annual General Meeting to take place on 26th of February
• Total pay for CEO Karsten Wildberger includes €1.45m salary
• The total compensation is 97% higher than the average for the industry
• Ceconomy's EPS declined by 33% over the past three years while total shareholder loss over the past three years was 10%

Ceconomy AG (ETR:CEC) has not performed well recently and CEO Karsten Wildberger will probably need to up their game. At the upcoming AGM on 26th of February, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Ceconomy

Comparing Ceconomy AG's CEO Compensation With The Industry

At the time of writing, our data shows that Ceconomy AG has a market capitalization of €1.5b, and reported total annual CEO compensation of €2.8m for the year to September 2024. That's a notable increase of 14% on last year. Notably, the salary which is €1.45m, represents a considerable chunk of the total compensation being paid.

On comparing similar companies from the German Specialty Retail industry with market caps ranging from €961m to €3.1b, we found that the median CEO total compensation was €1.4m. Accordingly, our analysis reveals that Ceconomy AG pays Karsten Wildberger north of the industry median.

Component	2024	2023	Proportion (2024)
Salary	€1.5m	€1.4m	52%
Other	€1.4m	€1.1m	48%
Total Compensation	€2.8m	€2.5m	100%

Talking in terms of the industry, salary represented approximately 66% of total compensation out of all the companies we analyzed, while other remuneration made up 34% of the pie. It's interesting to note that Ceconomy allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Ceconomy AG's Growth

Over the last three years, Ceconomy AG has shrunk its earnings per share by 33% per year. It achieved revenue growth of 3.9% over the last year.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Ceconomy AG Been A Good Investment?

Since shareholders would have lost about 10% over three years, some Ceconomy AG investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Ceconomy that you should be aware of before investing.

Important note: Ceconomy 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. 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.