Tim Höttges has been the CEO of Deutsche Telekom AG (FRA:DTE) since 2014. First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Tim Höttges’s Compensation Compare With Similar Sized Companies?
According to our data, Deutsche Telekom AG has a market capitalization of €74b, and pays its CEO total annual compensation worth €5.8m. (This figure is for the year to December 2018). That’s a modest increase of 2.7% on the prior year year. While we always look at total compensation first, we note that the salary component is less, at €1.5m. We looked at a group of companies with market capitalizations over €7.1b and the median CEO total compensation was €4.4m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
As you can see, Tim Höttges is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Deutsche Telekom AG 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 Deutsche Telekom has changed over time.
Is Deutsche Telekom AG Growing?
Deutsche Telekom AG has reduced its earnings per share by an average of 22% a year, over the last three years (measured with a line of best fit). Its revenue is up 1.1% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Deutsche Telekom AG Been A Good Investment?
With a total shareholder return of 14% over three years, Deutsche Telekom AG shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
We compared the total CEO remuneration paid by Deutsche Telekom AG, and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.Earnings per share have not grown in three years, and the revenue growth fails to impress us.
And shareholder returns are decent but not great. So you may want to delve deeper, because we don’t think the CEO pay is too low. Whatever your view on compensation, you might want to check if insiders are buying or selling Deutsche Telekom shares (free trial).
If you want to buy a stock that is better than Deutsche Telekom, this free list of high return, low debt companies is a great place to look.
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