Is Deutsche Post AG's (ETR:DPW) CEO Being Overpaid?

In 2008 Frank Appel was appointed CEO of Deutsche Post AG (ETR:DPW). First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Deutsche Post

How Does Frank Appel's Compensation Compare With Similar Sized Companies?

Our data indicates that Deutsche Post AG is worth €42b, and total annual CEO compensation was reported as €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 €2.1m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We took a group of companies with market capitalizations over €7.2b, and calculated the median CEO total compensation to be €4.1m. (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).

It would therefore appear that Deutsche Post AG pays Frank Appel more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Deutsche Post, below.

Is Deutsche Post AG Growing?

Deutsche Post AG has reduced its earnings per share by an average of 6.8% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 4.5% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.

Has Deutsche Post AG Been A Good Investment?

Deutsche Post AG has generated a total shareholder return of 19% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We compared total CEO remuneration at Deutsche Post AG with the amount paid at 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. While shareholder returns are acceptable, they don't delight. So we doubt many shareholders would consider the CEO pay to be particularly modest! Whatever your view on compensation, you might want to check if insiders are buying or selling Deutsche Post shares (free trial).

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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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