Yahoo Finance Increases to CEO Compensation Might Be Put On Hold For Now at Deutsche Lufthansa AG (ETR:LHA)
Key Insights
Deutsche Lufthansa's Annual General Meeting to take place on 7th of May
Salary of €1.89m is part of CEO Carsten Spohr's total remuneration
The overall pay is 117% above the industry average
Deutsche Lufthansa's EPS grew by 128% over the past three years while total shareholder loss over the past three years was 14%
In the past three years, shareholders of Deutsche Lufthansa AG (ETR:LHA) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 7th of May could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
See our latest analysis for Deutsche Lufthansa
Comparing Deutsche Lufthansa AG's CEO Compensation With The Industry
Our data indicates that Deutsche Lufthansa AG has a market capitalization of €8.0b, and total annual CEO compensation was reported as €5.6m for the year to December 2023. That's a notable increase of 9.1% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at €1.9m.
In comparison with other companies in the Germany Airlines industry with market capitalizations ranging from €3.7b to €11b, the reported median CEO total compensation was €2.6m. This suggests that Carsten Spohr is paid more than the median for the industry. What's more, Carsten Spohr holds €2.2m worth of shares in the company in their own name.
Component | 2023 | 2022 | Proportion (2023) |
Salary | €1.9m | €1.6m | 34% |
Other | €3.7m | €3.5m | 66% |
Total Compensation | €5.6m | €5.1m | 100% |
On an industry level, roughly 47% of total compensation represents salary and 53% is other remuneration. In Deutsche Lufthansa's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Deutsche Lufthansa AG's Growth
Over the past three years, Deutsche Lufthansa AG has seen its earnings per share (EPS) grow by 128% per year. It achieved revenue growth of 8.8% over the last year.
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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Deutsche Lufthansa AG Been A Good Investment?
Given the total shareholder loss of 14% over three years, many shareholders in Deutsche Lufthansa AG are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Deutsche Lufthansa that you should be aware of before investing.
Important note: Deutsche Lufthansa is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
