Should Shareholders Have Second Thoughts About A Pay Rise For Stockmann Oyj Abp's (HEL:STOCKA) CEO This Year?

The underwhelming performance at Stockmann Oyj Abp (HEL:STOCKA) recently has probably not pleased shareholders. The next AGM coming up on 23 March 2022 will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

Check out our latest analysis for Stockmann Oyj Abp

Comparing Stockmann Oyj Abp's CEO Compensation With the industry

At the time of writing, our data shows that Stockmann Oyj Abp has a market capitalization of €292m, and reported total annual CEO compensation of €604k for the year to December 2021. Notably, that's an increase of 14% over the year before. In particular, the salary of €442.7k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between €182m and €727m, we discovered that the median CEO total compensation of that group was €1.1m. Accordingly, Stockmann Oyj Abp pays its CEO under the industry median.

Component	2021	2020	Proportion (2021)
Salary	€443k	€429k	73%
Other	€162k	€99k	27%
Total Compensation	€604k	€528k	100%

On an industry level, around 73% of total compensation represents salary and 27% is other remuneration. There isn't a significant difference between Stockmann Oyj Abp and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Stockmann Oyj Abp's Growth Numbers

Stockmann Oyj Abp has reduced its earnings per share by 38% a year over the last three years. In the last year, its revenue is up 14%.

Overall this is not a very positive result for shareholders. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Stockmann Oyj Abp Been A Good Investment?

With a three year total loss of 19% for the shareholders, Stockmann Oyj Abp would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 2 which make us uncomfortable) in Stockmann Oyj Abp we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.