Should Shareholders Reconsider Vetropack Holding AG's (VTX:VETN) CEO Compensation Package?

Key Insights

• Vetropack Holding's Annual General Meeting to take place on 19th of April
• CEO Johann Reiter's total compensation includes salary of CHF607.3k
• Total compensation is similar to the industry average
• Vetropack Holding's three-year loss to shareholders was 4.4% while its EPS was down 17% over the past three years

The results at Vetropack Holding AG (VTX:VETN) have been quite disappointing recently and CEO Johann Reiter bears some responsibility for this. At the upcoming AGM on 19th of April, 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Vetropack Holding

Comparing Vetropack Holding AG's CEO Compensation With The Industry

According to our data, Vetropack Holding AG has a market capitalization of CHF920m, and paid its CEO total annual compensation worth CHF1.2m over the year to December 2022. Notably, that's an increase of 8.4% over the year before. In particular, the salary of CHF607.3k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the Switzerland Packaging industry with market caps ranging from CHF359m to CHF1.4b, we found that the median CEO total compensation was CHF985k. This suggests that Vetropack Holding remunerates its CEO largely in line with the industry average.

Component	2022	2021	Proportion (2022)
Salary	CHF607k	CHF600k	52%
Other	CHF566k	CHF482k	48%
Total Compensation	CHF1.2m	CHF1.1m	100%

On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. In Vetropack Holding's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Vetropack Holding AG's Growth Numbers

Vetropack Holding AG has reduced its earnings per share by 17% a year over the last three years. It achieved revenue growth of 10% over the last year.

The decline in EPS is a bit concerning. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Vetropack Holding AG Been A Good Investment?

Since shareholders would have lost about 4.4% over three years, some Vetropack Holding AG investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Vetropack Holding that investors should be aware of in a dynamic business environment.

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. 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.