We Think The Compensation For Swisscom AG's (VTX:SCMN) CEO Looks About Right

Key Insights

• Swisscom will host its Annual General Meeting on 26th of March
• Salary of CHF882.0k is part of CEO Christoph Aeschlimann's total remuneration
• Total compensation is similar to the industry average
• Over the past three years, Swisscom's EPS fell by 5.6% and over the past three years, the total shareholder return was 5.5%

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Despite positive share price growth of 5.5% for Swisscom AG (VTX:SCMN) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 26th of March. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Swisscom

Comparing Swisscom AG's CEO Compensation With The Industry

Our data indicates that Swisscom AG has a market capitalization of CHF27b, and total annual CEO compensation was reported as CHF2.0m for the year to December 2024. That's just a smallish increase of 6.4% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CHF882k.

On comparing similar companies in the Switzerland Telecom industry with market capitalizations above CHF7.0b, we found that the median total CEO compensation was CHF2.3m. This suggests that Swisscom remunerates its CEO largely in line with the industry average. What's more, Christoph Aeschlimann holds CHF878k worth of shares in the company in their own name.

Component	2024	2023	Proportion (2024)
Salary	CHF882k	CHF882k	45%
Other	CHF1.1m	CHF972k	55%
Total Compensation	CHF2.0m	CHF1.9m	100%

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. It's interesting to note that Swisscom 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.

Swisscom AG's Growth

Over the last three years, Swisscom AG has shrunk its earnings per share by 5.6% per year. In the last year, its revenue changed by just 0.3%.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Swisscom AG Been A Good Investment?

Swisscom AG has not done too badly by shareholders, with a total return of 5.5%, over three years. It would be nice to see that metric improve in the future. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 Swisscom that investors should look into moving forward.

Switching gears from Swisscom, 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. 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.