Stock Analysis

We Think Shareholders May Want To Consider A Review Of AMG Advanced Metallurgical Group N.V.'s (AMS:AMG) CEO Compensation Package

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AMG Advanced Metallurgical Group N.V. (AMS:AMG) has not performed well recently and CEO Heinz Schimmelbusch will probably need to up their game. At the upcoming AGM on 06 May 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for AMG Advanced Metallurgical Group

How Does Total Compensation For Heinz Schimmelbusch Compare With Other Companies In The Industry?

At the time of writing, our data shows that AMG Advanced Metallurgical Group N.V. has a market capitalization of €1.0b, and reported total annual CEO compensation of US$2.2m for the year to December 2020. Notably, that's a decrease of 48% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.

On comparing similar companies from the same industry with market caps ranging from €825m to €2.6b, we found that the median CEO total compensation was US$1.2m. Accordingly, our analysis reveals that AMG Advanced Metallurgical Group N.V. pays Heinz Schimmelbusch north of the industry median. Moreover, Heinz Schimmelbusch also holds €34m worth of AMG Advanced Metallurgical Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$1.0m US$1.0m 47%
Other US$1.2m US$3.2m 53%
Total CompensationUS$2.2m US$4.2m100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. AMG Advanced Metallurgical Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ENXTAM:AMG CEO Compensation April 30th 2021

AMG Advanced Metallurgical Group N.V.'s Growth

Over the last three years, AMG Advanced Metallurgical Group N.V. has shrunk its earnings per share by 93% per year. Its revenue is down 21% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 AMG Advanced Metallurgical Group N.V. Been A Good Investment?

With a three year total loss of 21% for the shareholders, AMG Advanced Metallurgical Group N.V. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. 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 an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which is potentially serious) in AMG Advanced Metallurgical Group we think you should know about.

Important note: AMG Advanced Metallurgical Group 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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