Here's Why Shareholders Should Examine Ponsse Oyj's (HEL:PON1V) CEO Compensation Package More Closely

Key Insights

• Ponsse Oyj's Annual General Meeting to take place on 9th of April
• Salary of €532.7k is part of CEO Juho Nummela's total remuneration
• The overall pay is comparable to the industry average
• Ponsse Oyj's three-year loss to shareholders was 35% while its EPS was down 2.4% over the past three years

The results at Ponsse Oyj (HEL:PON1V) have been quite disappointing recently and CEO Juho Nummela bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 9th 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.

View our latest analysis for Ponsse Oyj

How Does Total Compensation For Juho Nummela Compare With Other Companies In The Industry?

According to our data, Ponsse Oyj has a market capitalization of €669m, and paid its CEO total annual compensation worth €1.2m over the year to December 2023. We note that's an increase of 22% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at €533k.

In comparison with other companies in the Finnish Machinery industry with market capitalizations ranging from €371m to €1.5b, the reported median CEO total compensation was €1.0m. From this we gather that Juho Nummela is paid around the median for CEOs in the industry. Furthermore, Juho Nummela directly owns €3.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	€533k	€513k	45%
Other	€645k	€452k	55%
Total Compensation	€1.2m	€965k	100%

On an industry level, roughly 68% of total compensation represents salary and 32% is other remuneration. Ponsse Oyj sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Ponsse Oyj's Growth Numbers

Over the last three years, Ponsse Oyj has shrunk its earnings per share by 2.4% per year. It achieved revenue growth of 8.8% over the last year.

Its a bit disappointing to see that the company has failed to grow its EPS. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Ponsse Oyj Been A Good Investment?

The return of -35% over three years would not have pleased Ponsse Oyj shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO 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.

So you may want to check if insiders are buying Ponsse Oyj shares with their own money (free access).

Important note: Ponsse Oyj 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.