Shareholders May Be More Conservative With Koninklijke KPN N.V.'s (AMS:KPN) CEO Compensation For Now

Key Insights

• Koninklijke KPN's Annual General Meeting to take place on 16th of April
• Total pay for CEO Joost F. Farwerck includes €908.1k salary
• The total compensation is 41% higher than the average for the industry
• Koninklijke KPN's EPS declined by 12% over the past three years while total shareholder return over the past three years was 31%

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The share price of Koninklijke KPN N.V. (AMS:KPN) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 16th of April. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. 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.

Check out our latest analysis for Koninklijke KPN

How Does Total Compensation For Joost F. Farwerck Compare With Other Companies In The Industry?

According to our data, Koninklijke KPN N.V. has a market capitalization of €15b, and paid its CEO total annual compensation worth €3.0m over the year to December 2024. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €908k.

For comparison, other companies in the the Netherlands Telecom industry with market capitalizations above €7.3b, reported a median total CEO compensation of €2.1m. This suggests that Joost F. Farwerck is paid more than the median for the industry. What's more, Joost F. Farwerck holds €7.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. It's interesting to note that Koninklijke KPN allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Koninklijke KPN N.V.'s Growth

Over the last three years, Koninklijke KPN N.V. has shrunk its earnings per share by 12% per year. In the last year, its revenue is up 3.0%.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future .

Has Koninklijke KPN N.V. Been A Good Investment?

With a total shareholder return of 31% over three years, Koninklijke KPN N.V. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Koninklijke KPN that investors should be aware of in a dynamic business environment.

Important note: Koninklijke KPN 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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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.