We Think The Swatch Group AG's (VTX:UHR) CEO Compensation Package Needs To Be Put Under A Microscope

The Swatch Group AG (VTX:UHR) has not performed well recently and CEO Nick Hayek will probably need to up their game. At the upcoming AGM on 11 May 2021, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Swatch Group

How Does Total Compensation For Nick Hayek Compare With Other Companies In The Industry?

Our data indicates that The Swatch Group AG has a market capitalization of CHF14b, and total annual CEO compensation was reported as CHF4.7m for the year to December 2020. Notably, that's a decrease of 26% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at CHF1.5m.

On comparing similar companies in the industry with market capitalizations above CHF7.3b, we found that the median total CEO compensation was CHF4.7m. So it looks like Swatch Group compensates Nick Hayek in line with the median for the industry. Furthermore, Nick Hayek directly owns CHF9.9m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	CHF1.5m	CHF1.5m	32%
Other	CHF3.2m	CHF4.9m	68%
Total Compensation	CHF4.7m	CHF6.4m	100%

Speaking on an industry level, nearly 74% of total compensation represents salary, while the remainder of 26% is other remuneration. It's interesting to note that Swatch 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 The Swatch Group AG's Growth Numbers

Over the last three years, The Swatch Group AG has shrunk its earnings per share by 52% per year. It saw its revenue drop 32% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has The Swatch Group AG Been A Good Investment?

With a total shareholder return of -36% over three years, The Swatch Group AG shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

So you may want to check if insiders are buying Swatch Group shares with their own money (free access).

Switching gears from Swatch Group, 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. 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.
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