paragon GmbH & Co. KGaA's (ETR:PGN) CEO Might Not Expect Shareholders To Be So Generous This Year
Key Insights
paragon GmbH KGaA will host its Annual General Meeting on 12th of June
Salary of €600.0k is part of CEO Klaus Frers's total remuneration
Total compensation is 317% above industry average
paragon GmbH KGaA's EPS declined by 79% over the past three years while total shareholder loss over the past three years was 69%
paragon GmbH & Co. KGaA (ETR:PGN) has not performed well recently and CEO Klaus Frers will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 12th of June. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
View our latest analysis for paragon GmbH KGaA
How Does Total Compensation For Klaus Frers Compare With Other Companies In The Industry?
According to our data, paragon GmbH & Co. KGaA has a market capitalization of €16m, and paid its CEO total annual compensation worth €1.4m over the year to December 2023. That's a notable increase of 29% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €600k.
For comparison, other companies in the German Auto Components industry with market capitalizations below €184m, reported a median total CEO compensation of €342k. Accordingly, our analysis reveals that paragon GmbH & Co. KGaA pays Klaus Frers north of the industry median.
Component | 2023 | 2022 | Proportion (2023) |
Salary | €600k | €600k | 42% |
Other | €828k | €505k | 58% |
Total Compensation | €1.4m | €1.1m | 100% |
Speaking on an industry level, nearly 37% of total compensation represents salary, while the remainder of 63% is other remuneration. According to our research, paragon GmbH KGaA has allocated a higher percentage of pay to salary in comparison to the wider industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
paragon GmbH & Co. KGaA's Growth
paragon GmbH & Co. KGaA has reduced its earnings per share by 79% a year over the last three years. It saw its revenue drop 4.3% over the last year.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has paragon GmbH & Co. KGaA Been A Good Investment?
Few paragon GmbH & Co. KGaA shareholders would feel satisfied with the return of -69% over three years. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for paragon GmbH KGaA (of which 3 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from paragon GmbH KGaA, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.