Shareholders May Not Be So Generous With Digia Oyj's (HEL:DIGIA) CEO Compensation And Here's Why

Key Insights

• Digia Oyj will host its Annual General Meeting on 27th of March
• Salary of €392.0k is part of CEO Timo Levoranta's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, Digia Oyj's EPS grew by 4.1% and over the past three years, the total loss to shareholders 4.7%

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In the past three years, the share price of Digia Oyj (HEL:DIGIA) has struggled to generate growth for its shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 27th of March. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Digia Oyj

Comparing Digia Oyj's CEO Compensation With The Industry

According to our data, Digia Oyj has a market capitalization of €182m, and paid its CEO total annual compensation worth €392k over the year to December 2024. That's a notable decrease of 60% on last year. Notably, the salary of €392k is the entirety of the CEO compensation.

For comparison, other companies in the Finnish IT industry with market capitalizations ranging between €92m and €369m had a median total CEO compensation of €457k. So it looks like Digia Oyj compensates Timo Levoranta in line with the median for the industry. Moreover, Timo Levoranta also holds €1.0m worth of Digia Oyj stock directly under their own name.

Component	2024	2023	Proportion (2024)
Salary	€392k	€981k	100%
Other	-	-	-
Total Compensation	€392k	€981k	100%

On an industry level, roughly 62% of total compensation represents salary and 38% is other remuneration. At the company level, Digia Oyj pays Timo Levoranta solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Digia Oyj's Growth

Over the past three years, Digia Oyj has seen its earnings per share (EPS) grow by 4.1% per year. Its revenue is up 7.1% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but we're happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. 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 Digia Oyj Been A Good Investment?

Since shareholders would have lost about 4.7% over three years, some Digia Oyj investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Digia Oyj pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 Digia Oyj that investors should think about before committing capital to this stock.

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.