We Discuss Why The CEO Of VAT Group AG (VTX:VACN) Is Due For A Pay Rise

Key Insights

• VAT Group will host its Annual General Meeting on 16th of May
• Salary of CHF550.0k is part of CEO Mike Allison's total remuneration
• The total compensation is 43% less than the average for the industry
• VAT Group's EPS grew by 60% over the past three years while total shareholder return over the past three years was 111%

The impressive results at VAT Group AG (VTX:VACN) recently will be great news for shareholders. At the upcoming AGM on 16th of May, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and probably deserves a well-earned pay rise.

Check out our latest analysis for VAT Group

Comparing VAT Group AG's CEO Compensation With The Industry

At the time of writing, our data shows that VAT Group AG has a market capitalization of CHF9.7b, and reported total annual CEO compensation of CHF1.5m for the year to December 2022. 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 CHF550k.

On comparing similar companies in the Swiss Machinery industry with market capitalizations above CHF7.1b, we found that the median total CEO compensation was CHF2.6m. In other words, VAT Group pays its CEO lower than the industry median. What's more, Mike Allison holds CHF1.7m worth of shares in the company in their own name.

Component	2022	2021	Proportion (2022)
Salary	CHF550k	CHF520k	37%
Other	CHF944k	CHF964k	63%
Total Compensation	CHF1.5m	CHF1.5m	100%

Speaking on an industry level, nearly 43% of total compensation represents salary, while the remainder of 57% is other remuneration. It's interesting to note that VAT Group 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.

A Look at VAT Group AG's Growth Numbers

VAT Group AG has seen its earnings per share (EPS) increase by 60% a year over the past three years. Its revenue is up 27% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 VAT Group AG Been A Good Investment?

Most shareholders would probably be pleased with VAT Group AG for providing a total return of 111% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term 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 VAT Group that investors should think about before committing capital to this stock.

Important note: VAT Group 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.