Yahoo Finance We Think Shareholders Are Less Likely To Approve A Large Pay Rise For freenet AG's (ETR:FNTN) CEO For Now
Key Insights
freenet's Annual General Meeting to take place on 8th of May
CEO Christoph Vilanek's total compensation includes salary of €1.02m
Total compensation is 43% above industry average
freenet's total shareholder return over the past three years was 56% while its EPS was down 5.3% over the past three years
freenet AG (ETR:FNTN) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 8th of May. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
Check out our latest analysis for freenet
Comparing freenet AG's CEO Compensation With The Industry
According to our data, freenet AG has a market capitalization of €3.1b, and paid its CEO total annual compensation worth €5.7m over the year to December 2023. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.0m.
On examining similar-sized companies in the Germany Wireless Telecom industry with market capitalizations between €1.9b and €6.0b, we discovered that the median CEO total compensation of that group was €4.0m. Accordingly, our analysis reveals that freenet AG pays Christoph Vilanek north of the industry median.
Component | 2023 | 2022 | Proportion (2023) |
Salary | €1.0m | €1.0m | 18% |
Other | €4.6m | €4.6m | 82% |
Total Compensation | €5.7m | €5.6m | 100% |
Speaking on an industry level, nearly 32% of total compensation represents salary, while the remainder of 68% is other remuneration. In freenet'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.
A Look at freenet AG's Growth Numbers
Over the last three years, freenet AG has shrunk its earnings per share by 5.3% per year. It achieved revenue growth of 2.7% over the last year.
Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has freenet AG Been A Good Investment?
Boasting a total shareholder return of 56% over three years, freenet AG has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
To Conclude...
Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for freenet that investors should think about before committing capital to this stock.
Switching gears from freenet, 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.
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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.
