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Does TUI AG's (ETR:TUI1) CEO Pay Reflect Performance?

In 2016 Fritz Joussen was appointed CEO of TUI AG (ETR:TUI1). 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. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for TUI

How Does Fritz Joussen's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that TUI AG has a market cap of €6.1b, and reported total annual CEO compensation of €4.8m for the year to September 2018. While we always look at total compensation first, we note that the salary component is less, at €1.1m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from €3.6b to €11b, and discovered that the median CEO total compensation of that group was €3.2m.

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As you can see, Fritz Joussen is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean TUI AG is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at TUI has changed over time.

XTRA:TUI1 CEO Compensation, October 11th 2019
XTRA:TUI1 CEO Compensation, October 11th 2019

Is TUI AG Growing?

On average over the last three years, TUI AG has grown earnings per share (EPS) by 21% each year (using a line of best fit). It achieved revenue growth of 6.8% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.

Has TUI AG Been A Good Investment?

With a total shareholder return of 1.7% over three years, TUI AG has done okay by shareholders. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

We compared the total CEO remuneration paid by TUI AG, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. Looking at the same time period, we think that the shareholder returns are respectable. While it may be worth researching further, we don't see a problem with the CEO pay, given the good EPS growth. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling TUI (free visualization of insider trades).

If you want to buy a stock that is better than TUI, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.