In 2014 Reiner Winkler was appointed CEO of MTU Aero Engines AG (ETR:MTX). This analysis aims first to contrast CEO compensation with other large companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Reiner Winkler's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that MTU Aero Engines AG has a market cap of €14b, and reported total annual CEO compensation of €2.8m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €788k. 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 group of companies with market caps over €7.2b, we found that their median CEO total compensation was €4.1m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at MTU Aero Engines has changed from year to year.
Is MTU Aero Engines AG Growing?
Over the last three years MTU Aero Engines AG has grown its earnings per share (EPS) by an average of 14% per year (using a line of best fit). It achieved revenue growth of 34% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Shareholders might be interested in this free visualization of analyst forecasts.
Has MTU Aero Engines AG Been A Good Investment?
Most shareholders would probably be pleased with MTU Aero Engines AG for providing a total return of 144% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It appears that MTU Aero Engines AG remunerates its CEO below most large companies.
Considering the underlying business is growing earnings, this would suggest the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Reiner Winkler deserves a raise! It's not often we see shareholders do so well, and yet the CEO is paid modestly. But it is even better if company insiders are also buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at MTU Aero Engines.
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 firstname.lastname@example.org. 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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