We Think Shareholders Are Less Likely To Approve A Pay Rise For Netcompany Group A/S' (CPH:NETC) CEO For Now

Key Insights

• Netcompany Group will host its Annual General Meeting on 2nd of March
• Salary of kr.5.56m is part of CEO Andre Rogaczewski's total remuneration
• Total compensation is similar to the industry average
• Netcompany Group's EPS grew by 16% over the past three years while total shareholder loss over the past three years was 18%

In the past three years, the share price of Netcompany Group A/S (CPH:NETC) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 2nd of March. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Netcompany Group

Comparing Netcompany Group A/S' CEO Compensation With The Industry

According to our data, Netcompany Group A/S has a market capitalization of kr.13b, and paid its CEO total annual compensation worth kr.6.3m over the year to December 2022. Notably, that's a decrease of 45% over the year before. In particular, the salary of kr.5.56m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Denmark IT industry with market caps ranging from kr.7.0b to kr.23b, we found that the median CEO total compensation was kr.5.5m. From this we gather that Andre Rogaczewski is paid around the median for CEOs in the industry.

Component	2022	2021	Proportion (2022)
Salary	kr.5.6m	kr.8.2m	88%
Other	kr.765k	kr.3.4m	12%
Total Compensation	kr.6.3m	kr.12m	100%

On an industry level, around 64% of total compensation represents salary and 36% is other remuneration. Netcompany Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Netcompany Group A/S' Growth Numbers

Netcompany Group A/S has seen its earnings per share (EPS) increase by 16% a year over the past three years. Its revenue is up 53% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Netcompany Group A/S Been A Good Investment?

Since shareholders would have lost about 18% over three years, some Netcompany Group A/S investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for Netcompany Group that investors should be aware of in a dynamic business environment.

Important note: Netcompany Group 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.