Yahoo Finance Most Shareholders Will Probably Agree With SAP SE's (ETR:SAP) CEO Compensation
Key Insights
SAP's Annual General Meeting to take place on 15th of May
CEO Christian Klein's total compensation includes salary of €1.10m
The overall pay is 33% below the industry average
SAP's total shareholder return over the past three years was 67% while its EPS was down 21% over the past three years
The performance at SAP SE (ETR:SAP) has been rather lacklustre of late and shareholders may be wondering what CEO Christian Klein is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 15th of May. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.
View our latest analysis for SAP
How Does Total Compensation For Christian Klein Compare With Other Companies In The Industry?
At the time of writing, our data shows that SAP SE has a market capitalization of €205b, and reported total annual CEO compensation of €8.5m for the year to December 2023. This means that the compensation hasn't changed much from last year. While we always look at total compensation first, our analysis shows that the salary component is less, at €1.1m.
On comparing similar companies in the German Software industry with market capitalizations above €7.4b, we found that the median total CEO compensation was €13m. That is to say, Christian Klein is paid under the industry median.
Component | 2023 | 2022 | Proportion (2023) |
Salary | €1.1m | €1.1m | 13% |
Other | €7.4m | €7.4m | 87% |
Total Compensation | €8.5m | €8.5m | 100% |
On an industry level, around 65% of total compensation represents salary and 35% is other remuneration. It's interesting to note that SAP allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
SAP SE's Growth
Over the last three years, SAP SE has shrunk its earnings per share by 21% per year. Its revenue is up 5.4% over the last year.
Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has SAP SE Been A Good Investment?
Boasting a total shareholder return of 67% over three years, SAP SE has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.
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 SAP that you should be aware of before investing.
Important note: SAP 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.
