We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Loihde Oyj's (HEL:LOIHDE) CEO For Now

Key Insights

• Loihde Oyj will host its Annual General Meeting on 8th of May
• Salary of €328.0k is part of CEO Samu Konttinen's total remuneration
• The total compensation is 31% higher than the average for the industry
• Loihde Oyj's EPS declined by 79% over the past three years while total shareholder return over the past three years was 2.4%

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Share price growth at Loihde Oyj (HEL:LOIHDE) has remained rather flat over the last few years and it may be because earnings has struggled to grow at all. The upcoming AGM on 8th of May may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Loihde Oyj

How Does Total Compensation For Samu Konttinen Compare With Other Companies In The Industry?

According to our data, Loihde Oyj has a market capitalization of €71m, and paid its CEO total annual compensation worth €382k over the year to December 2024. That's a fairly small increase of 6.1% over the previous year. Notably, the salary which is €328.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the Finnish Software industry with market capitalizations below €177m, we found that the median total CEO compensation was €292k. Hence, we can conclude that Samu Konttinen is remunerated higher than the industry median. Furthermore, Samu Konttinen directly owns €263k worth of shares in the company.

Speaking on an industry level, nearly 86% of total compensation represents salary, while the remainder of 14% is other remuneration. Our data reveals that Loihde Oyj allocates salary more or less in line with the wider market. 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.

A Look at Loihde Oyj's Growth Numbers

Over the last three years, Loihde Oyj has shrunk its earnings per share by 79% per year. Its revenue is up 5.3% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Loihde Oyj Been A Good Investment?

Loihde Oyj has not done too badly by shareholders, with a total return of 2.4%, over three years. It would be nice to see that metric improve in the future. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

The lacklustre share price returns along with the lack of earnings growth makes us think that a strong rebound in the share price may be difficult. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Loihde Oyj that investors should be aware of in a dynamic business environment.

Important note: Loihde 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.