We Think Some Shareholders May Hesitate To Increase SRV Yhtiöt Oyj's (HEL:SRV1V) CEO Compensation

Key Insights

• SRV Yhtiöt Oyj will host its Annual General Meeting on 25th of March
• CEO Saku Sipola's total compensation includes salary of €480.8k
• Total compensation is similar to the industry average
• SRV Yhtiöt Oyj's three-year loss to shareholders was 73% while its EPS grew by 26% over the past three years

In the past three years, the share price of SRV Yhtiöt Oyj (HEL:SRV1V) 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 25th of March. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for SRV Yhtiöt Oyj

How Does Total Compensation For Saku Sipola Compare With Other Companies In The Industry?

At the time of writing, our data shows that SRV Yhtiöt Oyj has a market capitalization of €63m, and reported total annual CEO compensation of €616k for the year to December 2023. That is, the compensation was roughly the same as last year. Notably, the salary which is €480.8k, represents most of the total compensation being paid.

On comparing similar-sized companies in the Finnish Construction industry with market capitalizations below €184m, we found that the median total CEO compensation was €479k. From this we gather that Saku Sipola is paid around the median for CEOs in the industry. What's more, Saku Sipola holds €525k worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	€481k	€439k	78%
Other	€135k	€192k	22%
Total Compensation	€616k	€631k	100%

Talking in terms of the industry, salary represented approximately 49% of total compensation out of all the companies we analyzed, while other remuneration made up 51% of the pie. SRV Yhtiöt Oyj pays out 78% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

SRV Yhtiöt Oyj's Growth

SRV Yhtiöt Oyj's earnings per share (EPS) grew 26% per year over the last three years. In the last year, its revenue is down 21%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has SRV Yhtiöt Oyj Been A Good Investment?

Few SRV Yhtiöt Oyj shareholders would feel satisfied with the return of -73% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for SRV Yhtiöt Oyj that you should be aware of before investing.

Switching gears from SRV Yhtiöt Oyj, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.