Here's Why We Think InVision Aktiengesellschaft's (ETR:IVX) CEO Compensation Looks Fair for the time being

InVision Aktiengesellschaft (ETR:IVX) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 08 October 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for InVision

How Does Total Compensation For Peter Bollenbeck Compare With Other Companies In The Industry?

At the time of writing, our data shows that InVision Aktiengesellschaft has a market capitalization of €66m, and reported total annual CEO compensation of €365k for the year to December 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of €360.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below €173m, reported a median total CEO compensation of €284k. This suggests that InVision remunerates its CEO largely in line with the industry average. What's more, Peter Bollenbeck holds €11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	€360k	€360k	99%
Other	€4.7k	€4.4k	1%
Total Compensation	€365k	€364k	100%

On an industry level, total compensation is equally proportioned between salary and other compensation, that is, they each represent approximately 50% of the total compensation. Investors will find it interesting that InVision pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

InVision Aktiengesellschaft's Growth

Over the last three years, InVision Aktiengesellschaft has shrunk its earnings per share by 28% per year. Its revenue is up 6.6% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 InVision Aktiengesellschaft Been A Good Investment?

We think that the total shareholder return of 68%, over three years, would leave most InVision Aktiengesellschaft shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Peter receives almost all of their compensation through a salary. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for InVision (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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.

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.

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