We Think Shareholders Are Less Likely To Approve A Pay Rise For AS LHV Group's (TAL:LHV1T) CEO For Now
Key Insights
- AS LHV Group's Annual General Meeting to take place on 26th of March
- Salary of €222.0k is part of CEO Madis Toomsalu's total remuneration
- The total compensation is similar to the average for the industry
- Over the past three years, AS LHV Group's EPS grew by 32% and over the past three years, the total loss to shareholders 9.4%
As many shareholders of AS LHV Group (TAL:LHV1T) will be aware, they have not made a gain on their investment in the past three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 26th of March could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. 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 AS LHV Group
How Does Total Compensation For Madis Toomsalu Compare With Other Companies In The Industry?
At the time of writing, our data shows that AS LHV Group has a market capitalization of €1.1b, and reported total annual CEO compensation of €606k for the year to December 2024. That's a fairly small increase of 5.2% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at €222k.
In comparison with other companies in the Europe Banks industry with market capitalizations ranging from €918m to €2.9b, the reported median CEO total compensation was €768k. So it looks like AS LHV Group compensates Madis Toomsalu in line with the median for the industry. Furthermore, Madis Toomsalu directly owns €5.5m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2024 | 2023 | Proportion (2024) |
| Salary | €222k | €192k | 37% |
| Other | €384k | €384k | 63% |
| Total Compensation | €606k | €576k | 100% |
On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. AS LHV Group pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
AS LHV Group's Growth
AS LHV Group has seen its earnings per share (EPS) increase by 32% a year over the past three years. In the last year, its revenue is up 9.6%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 AS LHV Group Been A Good Investment?
Given the total shareholder loss of 9.4% over three years, many shareholders in AS LHV Group are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
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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.
About TLSE:LHV1T
AS LHV Group
Through its subsidiaries, provides various banking products and services to private and business customers in Estonia and United Kingdom.
Flawless balance sheet and good value.
