Shareholders May Not Be So Generous With Orell Füssli AG's (VTX:OFN) CEO Compensation And Here's Why

Key Insights

• Orell Füssli to hold its Annual General Meeting on 10th of May
• CEO Daniel Link's total compensation includes salary of CHF408.0k
• The total compensation is 55% higher than the average for the industry
• Orell Füssli's three-year loss to shareholders was 1.5% while its EPS grew by 0.03% over the past three years

In the past three years, the share price of Orell Füssli AG (VTX:OFN) has struggled to generate growth for its shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 10th of May. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Orell Füssli

How Does Total Compensation For Daniel Link Compare With Other Companies In The Industry?

At the time of writing, our data shows that Orell Füssli AG has a market capitalization of CHF155m, and reported total annual CEO compensation of CHF815k for the year to December 2022. Notably, that's an increase of 10% over the year before. In particular, the salary of CHF408.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

In comparison with other companies in the Switzerland Commercial Services industry with market capitalizations ranging from CHF89m to CHF357m, the reported median CEO total compensation was CHF527k. Hence, we can conclude that Daniel Link is remunerated higher than the industry median.

Component	2022	2021	Proportion (2022)
Salary	CHF408k	CHF408k	50%
Other	CHF407k	CHF332k	50%
Total Compensation	CHF815k	CHF740k	100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. In Orell Füssli's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Orell Füssli AG's Growth

Over the last three years, Orell Füssli AG has not seen its earnings per share change much, though there is a slight positive movement. Its revenue is up 3.3% over the last year.

We'd prefer higher revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Orell Füssli AG Been A Good Investment?

With a three year total loss of 1.5% for the shareholders, Orell Füssli AG would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Orell Füssli that investors should think about before committing capital to this stock.

Important note: Orell Füssli 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.