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Is KWS SAAT SE & Co. KGaA (ETR:KWS) Overpaying Its CEO?

In 2015 Hagen Duenbostel was appointed CEO of KWS SAAT SE & Co. KGaA (ETR:KWS). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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.

Check out our latest analysis for KWS SAAT SE KGaA

How Does Hagen Duenbostel's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that KWS SAAT SE & Co. KGaA has a market cap of €1.3b, and reported total annual CEO compensation of €1.2m for the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €375k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from €911m to €2.9b, and discovered that the median CEO total compensation of that group was €1.7m.

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So Hagen Duenbostel receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

The graphic below shows how CEO compensation at KWS SAAT SE KGaA has changed from year to year.

XTRA:KWS CEO Compensation, March 18th 2020
XTRA:KWS CEO Compensation, March 18th 2020

Is KWS SAAT SE & Co. KGaA Growing?

Over the last three years KWS SAAT SE & Co. KGaA has shrunk its earnings per share by an average of 2.9% per year (measured with a line of best fit). It achieved revenue growth of 3.7% over the last year.

Unfortunately there is a complete lack of earnings per share improvement, over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has KWS SAAT SE & Co. KGaA Been A Good Investment?

Since shareholders would have lost about 27% over three years, some KWS SAAT SE & Co. KGaA shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Hagen Duenbostel is paid around the same as most CEOs of similar size companies.

The company isn't growing EPS, and shareholder returns have been disappointing. Suffice it to say, we don't think the CEO is underpaid! CEO compensation is an important area to keep your eyes on, but we've also identified 3 warning signs for KWS SAAT SE KGaA (1 is a bit unpleasant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.