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Is HOCHTIEF Aktiengesellschaft's (ETR:HOT) CEO Salary Justified?

Simply Wall St

Marcelino Fernandez Verdes has been the CEO of HOCHTIEF Aktiengesellschaft (ETR:HOT) since 2012. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for HOCHTIEF

How Does Marcelino Fernandez Verdes's Compensation Compare With Similar Sized Companies?

Our data indicates that HOCHTIEF Aktiengesellschaft is worth €7.7b, and total annual CEO compensation was reported as €7.1m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €1.3m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from €3.6b to €11b, we found the median CEO total compensation was €3.2m.

As you can see, Marcelino Fernandez Verdes is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean HOCHTIEF Aktiengesellschaft is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

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

XTRA:HOT CEO Compensation, January 24th 2020

Is HOCHTIEF Aktiengesellschaft Growing?

Over the last three years HOCHTIEF Aktiengesellschaft has grown its earnings per share (EPS) by an average of 22% per year (using a line of best fit). It achieved revenue growth of 7.4% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested in this free visualization of analyst forecasts.

Has HOCHTIEF Aktiengesellschaft Been A Good Investment?

Since shareholders would have lost about 13% over three years, some HOCHTIEF Aktiengesellschaft shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We examined the amount HOCHTIEF Aktiengesellschaft pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. Whatever your view on compensation, you might want to check if insiders are buying or selling HOCHTIEF 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.