Here's Why Shareholders May Want To Be Cautious With Increasing Deutsche Lufthansa AG's (ETR:LHA) CEO Pay Packet

Key Insights

• Deutsche Lufthansa's Annual General Meeting to take place on 6th of May
• CEO Carsten Spohr's total compensation includes salary of €1.89m
• The total compensation is 183% higher than the average for the industry
• Deutsche Lufthansa's EPS grew by 88% over the past three years while total shareholder loss over the past three years was 11%

We've discovered 3 warning signs about Deutsche Lufthansa. View them for free.

In the past three years, shareholders of Deutsche Lufthansa AG (ETR:LHA) have seen a loss on their investment. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 6th of May could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Deutsche Lufthansa

Comparing Deutsche Lufthansa AG's CEO Compensation With The Industry

Our data indicates that Deutsche Lufthansa AG has a market capitalization of €7.5b, and total annual CEO compensation was reported as €6.2m for the year to December 2024. We note that's an increase of 12% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €1.9m.

For comparison, other companies in the Germany Airlines industry with market capitalizations ranging between €3.5b and €11b had a median total CEO compensation of €2.2m. Hence, we can conclude that Carsten Spohr is remunerated higher than the industry median. Moreover, Carsten Spohr also holds €2.0m worth of Deutsche Lufthansa stock directly under their own name.

Component	2024	2023	Proportion (2024)
Salary	€1.9m	€1.9m	30%
Other	€4.3m	€3.7m	70%
Total Compensation	€6.2m	€5.6m	100%

On an industry level, roughly 32% of total compensation represents salary and 68% is other remuneration. Although there is a difference in how total compensation is set, Deutsche Lufthansa more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Deutsche Lufthansa AG's Growth

Deutsche Lufthansa AG's earnings per share (EPS) grew 88% per year over the last three years. In the last year, its revenue is up 6.1%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Deutsche Lufthansa AG Been A Good Investment?

Given the total shareholder loss of 11% over three years, many shareholders in Deutsche Lufthansa AG are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Deutsche Lufthansa that investors should be aware of in a dynamic business environment.

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. 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.