What Can We Make Of Rheinmetall’s (ETR:RHM) CEO Compensation? – Simply Wall St News



Armin Papperger has been the CEO of Rheinmetall AG (ETR:RHM) since 2013, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Rheinmetall.

View our latest analysis for Rheinmetall

How Does Total Compensation For Armin Papperger Compare With Other Companies In The Industry?

According to our data, Rheinmetall AG has a market capitalization of €3.3b, and paid its CEO total annual compensation worth €5.5m over the year to December 2019. That’s mostly flat as compared to the prior year’s compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at €1.2m.

For comparison, other companies in the same industry with market capitalizations ranging between €1.8b and €5.7b had a median total CEO compensation of €2.7m. This suggests that Armin Papperger is paid more than the median for the industry.

Component 2019 2018 Proportion (2019)
Salary €1.2m €1.2m 22%
Other €4.3m €4.5m 78%
Total Compensation €5.5m €5.7m 100%

Talking in terms of the industry, salary represented approximately 33% of total compensation out of all the companies we analyzed, while other remuneration made up 67% of the pie. Rheinmetall sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

XTRA:RHM CEO Compensation June 30th 2020
XTRA:RHM CEO Compensation June 30th 2020

A Look at Rheinmetall AG’s Growth Numbers

Over the past three years, Rheinmetall AG has seen its earnings per share (EPS) grow by 14% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

This demonstrates that the company has been improving recently and is good news for the shareholders. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Rheinmetall AG Been A Good Investment?

Given the total shareholder loss of 0.5% over three years, many shareholders in Rheinmetall AG are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary…

As previously discussed, Armin is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the earnings per share growth is certainly impressive, but it’s disappointing to see negative shareholder returns over the same period. Considering overall performance, we can’t say Armin is underpaid, in fact compensation is definitely on the higher side.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We’ve identified 2 warning signs for Rheinmetall that investors should be aware of in a dynamic business environment.

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

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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. 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.
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