Here's Why Componenta Corporation's (HEL:CTH1V) CEO Compensation Is The Least Of Shareholders' Concerns

Key Insights

• Componenta to hold its Annual General Meeting on 23rd of April
• CEO Sami Sivuranta's total compensation includes salary of €277.1k
• Total compensation is similar to the industry average
• Componenta's EPS declined by 14% over the past three years while total shareholder return over the past three years was 41%

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Componenta Corporation (HEL:CTH1V) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 23rd of April may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Componenta

How Does Total Compensation For Sami Sivuranta Compare With Other Companies In The Industry?

At the time of writing, our data shows that Componenta Corporation has a market capitalization of €42m, and reported total annual CEO compensation of €277k for the year to December 2024. That's mostly flat as compared to the prior year's compensation. Notably, the salary of €277k is the entirety of the CEO compensation.

In comparison with other companies in the Finnish Machinery industry with market capitalizations under €176m, the reported median total CEO compensation was €250k. So it looks like Componenta compensates Sami Sivuranta in line with the median for the industry.

Speaking on an industry level, nearly 77% of total compensation represents salary, while the remainder of 23% is other remuneration. On a company level, Componenta prefers to reward its CEO through a salary, opting not to pay Sami Sivuranta 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.

Componenta Corporation's Growth

Componenta Corporation has reduced its earnings per share by 14% a year over the last three years. Its revenue is down 1.9% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Componenta Corporation Been A Good Investment?

We think that the total shareholder return of 41%, over three years, would leave most Componenta Corporation shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Componenta pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Componenta that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.