Should Shareholders Reconsider NorCom Information Technology GmbH & Co. KGaA's (ETR:NC5A) CEO Compensation Package?

Key Insights

• NorCom Information Technology GmbH KGaA to hold its Annual General Meeting on 25th of November
• Salary of €230.0k is part of CEO Viggo Nordbakk's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, NorCom Information Technology GmbH KGaA's EPS fell by 7.2% and over the past three years, the total loss to shareholders 59%

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 will be interested in what the board will have to say about turning performance around at the next AGM on 25th of November. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. 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 €8.6m, and total annual CEO compensation was reported as €230k for the year to December 2023. That's a notable decrease of 8.7% on last year. Notably, the salary of €230k is the entirety of the CEO compensation.

In comparison with other companies in the German IT industry with market capitalizations under €190m, the reported median total CEO compensation was €308k. From this we gather that Viggo Nordbakk is paid around the median for CEOs in the industry. What's more, Viggo Nordbakk holds €2.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	€230k	€252k	100%
Other	-	-	-
Total Compensation	€230k	€252k	100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. At the company level, NorCom Information Technology GmbH KGaA pays Viggo Nordbakk solely through a salary, preferring to go down a conventional route. 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

Over the last three years, NorCom Information Technology GmbH & Co. KGaA has shrunk its earnings per share by 7.2% per year. It saw its revenue drop 15% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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?

Few NorCom Information Technology GmbH & Co. KGaA shareholders would feel satisfied with the return of -59% over three years. 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. 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for NorCom Information Technology GmbH KGaA (of which 2 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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.