What We Learned About Forbo Holding's (VTX:FORN) CEO Pay

This article will reflect on the compensation paid to Stephan Bauer who has served as CEO of Forbo Holding AG (VTX:FORN) since 2014. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Forbo Holding

How Does Total Compensation For Stephan Bauer Compare With Other Companies In The Industry?

At the time of writing, our data shows that Forbo Holding AG has a market capitalization of CHF2.4b, and reported total annual CEO compensation of CHF887k for the year to December 2019. That's a notable decrease of 23% on last year. In particular, the salary of CHF601.8k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from CHF1.8b to CHF5.9b, the reported median CEO total compensation was CHF3.6m. In other words, Forbo Holding pays its CEO lower than the industry median. Furthermore, Stephan Bauer directly owns CHF4.0m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, salary and non-salary portions, both make up 50% each of the total remuneration. It's interesting to note that Forbo Holding pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Forbo Holding AG's Growth Numbers

Forbo Holding AG has seen its earnings per share (EPS) increase by 37% a year over the past three years. In the last year, its revenue is down 10%.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in 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 Forbo Holding AG Been A Good Investment?

With a total shareholder return of 3.3% over three years, Forbo Holding AG has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As we touched on above, Forbo Holding AG is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, EPS growth has been exceptional over the past three years. Shareholder returns, in comparison, have not been as impressive. We would wish for better returns (whether dividends or capital gains) but we do admire the solidEPS growth on show here. As a result of these considerations, CEO compensation seems quite appropriate.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Forbo Holding.

Important note: Forbo Holding 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.

If you’re looking to trade Forbo Holding, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.