Sika AG's (VTX:SIKA) CEO Will Probably Find It Hard To See A Huge Raise This Year

Key Insights

• Sika will host its Annual General Meeting on 25th of March
• Salary of CHF1.35m is part of CEO Thomas Hasler's total remuneration
• The overall pay is comparable to the industry average
• Sika's three-year loss to shareholders was 22% while its EPS grew by 4.0% over the past three years

In the past three years, the share price of Sika AG (VTX:SIKA) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 25th of March could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Sika

Comparing Sika AG's CEO Compensation With The Industry

At the time of writing, our data shows that Sika AG has a market capitalization of CHF37b, and reported total annual CEO compensation of CHF5.4m for the year to December 2024. We note that's an increase of 20% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CHF1.4m.

For comparison, other companies in the Swiss Chemicals industry with market capitalizations above CHF7.0b, reported a median total CEO compensation of CHF4.6m. So it looks like Sika compensates Thomas Hasler in line with the median for the industry. Furthermore, Thomas Hasler directly owns CHF7.8m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, total compensation is equally proportioned between salary and other compensation, that is, they each represent approximately 50% of the total compensation. Sika sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Sika AG's Growth Numbers

Sika AG has seen its earnings per share (EPS) increase by 4.0% a year over the past three years. It achieved revenue growth of 4.7% over the last year.

We're not particularly impressed by the revenue growth, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. 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 Sika AG Been A Good Investment?

With a three year total loss of 22% for the shareholders, Sika AG would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid 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. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Sika that investors should look into moving forward.

Important note: Sika 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.