Most Shareholders Will Probably Find That The CEO Compensation For E.ON SE (ETR:EOAN) Is Reasonable
Key Insights
- E.ON will host its Annual General Meeting on 15th of May
- Total pay for CEO Leo Birnbaum includes €1.44m salary
- Total compensation is similar to the industry average
- E.ON's total shareholder return over the past three years was 79% while its EPS was down 1.2% over the past three years
The share price of E.ON SE (ETR:EOAN) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 15th 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. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
See our latest analysis for E.ON
How Does Total Compensation For Leo Birnbaum Compare With Other Companies In The Industry?
At the time of writing, our data shows that E.ON SE has a market capitalization of €41b, and reported total annual CEO compensation of €6.0m for the year to December 2024. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at €1.4m.
In comparison with other companies in the Germany Integrated Utilities industry with market capitalizations over €7.1b, the reported median total CEO compensation was €5.1m. This suggests that E.ON remunerates its CEO largely in line with the industry average.
| Component | 2024 | 2023 | Proportion (2024) |
| Salary | €1.4m | €1.4m | 24% |
| Other | €4.5m | €4.6m | 76% |
| Total Compensation | €6.0m | €6.0m | 100% |
On an industry level, around 29% of total compensation represents salary and 71% is other remuneration. It's interesting to note that E.ON allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
E.ON SE's Growth
E.ON SE has reduced its earnings per share by 1.2% a year over the last three years. In the last year, its revenue is down 14%.
A lack of EPS improvement is not good to see. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 E.ON SE Been A Good Investment?
Most shareholders would probably be pleased with E.ON SE for providing a total return of 79% over three years. 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...
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. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 2 which make us uncomfortable) in E.ON we think you should know about.
Switching gears from E.ON, 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.