We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Leonteq AG's (VTX:LEON) CEO For Now

In the past three years, shareholders of Leonteq AG (VTX:LEON) have seen a loss on their investment. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 31 March 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. 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.

See our latest analysis for Leonteq

How Does Total Compensation For Lukas Ruflin Compare With Other Companies In The Industry?

At the time of writing, our data shows that Leonteq AG has a market capitalization of CHF844m, and reported total annual CEO compensation of CHF2.0m for the year to December 2020. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at CHF977k.

In comparison with other companies in the industry with market capitalizations ranging from CHF374m to CHF1.5b, the reported median CEO total compensation was CHF940k. This suggests that Lukas Ruflin is paid more than the median for the industry. Moreover, Lukas Ruflin also holds CHF74m worth of Leonteq stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	CHF977k	CHF1.0m	49%
Other	CHF1.0m	CHF955k	51%
Total Compensation	CHF2.0m	CHF2.0m	100%

On an industry level, roughly 52% of total compensation represents salary and 48% is other remuneration. There isn't a significant difference between Leonteq and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Leonteq AG's Growth

Over the past three years, Leonteq AG has seen its earnings per share (EPS) grow by 14% per year. It saw its revenue drop 7.6% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Leonteq AG Been A Good Investment?

Given the total shareholder loss of 7.7% over three years, many shareholders in Leonteq AG are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Leonteq you should be aware of, and 1 of them is potentially serious.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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