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Does RealTech AG's (ETR:RTC) CEO Pay Reflect Performance?

Simply Wall St

In 2016 Daniele Di Croce was appointed CEO of RealTech AG (ETR:RTC). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for RealTech

How Does Daniele Di Croce's Compensation Compare With Similar Sized Companies?

According to our data, RealTech AG has a market capitalization of €5.5m, and paid its CEO total annual compensation worth €233k over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €173k. We examined a group of similar sized companies, with market capitalizations of below €180m. The median CEO total compensation in that group is €388k.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.

You can see, below, how CEO compensation at RealTech has changed over time.

XTRA:RTC CEO Compensation, January 22nd 2020
XTRA:RTC CEO Compensation, January 22nd 2020

Is RealTech AG Growing?

Over the last three years RealTech AG has grown its earnings per share (EPS) by an average of 72% per year (using a line of best fit). Its revenue is down 19% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has RealTech AG Been A Good Investment?

Since shareholders would have lost about 47% over three years, some RealTech AG shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

It looks like RealTech AG pays its CEO less than similar sized companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. So while we would not say that Daniele Di Croce is generously paid, it would be good to see an improvement in business performance before too an increase in pay. This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. Shareholders may want to check for free if RealTech insiders are buying or selling shares.

Important note: RealTech may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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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