Here's Why Shareholders Should Examine NorCom Information Technology GmbH & Co. KGaA's (ETR:NC5A) CEO Compensation Package More Closely

NorCom Information Technology GmbH & Co. KGaA (ETR:NC5A) has not performed well recently and CEO Viggo Nordbakk will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 10 December 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for NorCom Information Technology GmbH KGaA

Comparing NorCom Information Technology GmbH & Co. KGaA's CEO Compensation With the industry

Our data indicates that NorCom Information Technology GmbH & Co. KGaA has a market capitalization of €19m, and total annual CEO compensation was reported as €308k for the year to December 2020. That's a slight decrease of 3.1% on the prior year. It is worth noting that the CEO compensation consists entirely of the salary, worth €308k.

For comparison, other companies in the industry with market capitalizations below €177m, reported a median total CEO compensation of €288k. From this we gather that Viggo Nordbakk is paid around the median for CEOs in the industry. Furthermore, Viggo Nordbakk directly owns €5.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 45% of total compensation represents salary, while the remainder of 55% is other remuneration. On a company level, NorCom Information Technology GmbH KGaA prefers to reward its CEO through a salary, opting not to pay Viggo Nordbakk through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at NorCom Information Technology GmbH & Co. KGaA's Growth Numbers

NorCom Information Technology GmbH & Co. KGaA has reduced its earnings per share by 56% a year over the last three years. In the last year, its revenue is down 14%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has NorCom Information Technology GmbH & Co. KGaA Been A Good Investment?

With a total shareholder return of -63% over three years, NorCom Information Technology GmbH & Co. KGaA shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

NorCom Information Technology GmbH KGaA pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. 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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for NorCom Information Technology GmbH KGaA (1 doesn't sit too well with us!) that you should be aware of before investing here.

Switching gears from NorCom Information Technology GmbH KGaA, 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.