Should Shareholders Reconsider AS Tallinna Sadam's (TAL:TSM1T) CEO Compensation Package?

Key Insights

• AS Tallinna Sadam will host its Annual General Meeting on 25th of April
• Total pay for CEO Valdo Kalm includes €157.0k salary
• The total compensation is 62% higher than the average for the industry
• AS Tallinna Sadam's three-year loss to shareholders was 29% while its EPS was down 18% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at AS Tallinna Sadam (TAL:TSM1T) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 25th of April. 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 AS Tallinna Sadam

Comparing AS Tallinna Sadam's CEO Compensation With The Industry

Our data indicates that AS Tallinna Sadam has a market capitalization of €320m, and total annual CEO compensation was reported as €216k for the year to December 2023. That's a notable increase of 31% on last year. Notably, the salary which is €157.0k, represents most of the total compensation being paid.

For comparison, other companies in the Europe Infrastructure industry with market capitalizations ranging between €188m and €752m had a median total CEO compensation of €133k. Accordingly, our analysis reveals that AS Tallinna Sadam pays Valdo Kalm north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	€157k	€145k	73%
Other	€59k	€20k	27%
Total Compensation	€216k	€165k	100%

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. According to our research, AS Tallinna Sadam has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

AS Tallinna Sadam's Growth

AS Tallinna Sadam has reduced its earnings per share by 18% a year over the last three years. It saw its revenue drop 4.2% over the last year.

The decline in EPS is a bit concerning. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has AS Tallinna Sadam Been A Good Investment?

Since shareholders would have lost about 29% over three years, some AS Tallinna Sadam investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for AS Tallinna Sadam that investors should be aware of in a dynamic business environment.

Important note: AS Tallinna Sadam 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.