Shareholders May Be More Conservative With SThree plc's (LON:STEM) CEO Compensation For Now

Key Insights

• SThree's Annual General Meeting to take place on 29th of April
• Salary of UK£510.9k is part of CEO Timo Lehne's total remuneration
• Total compensation is 49% above industry average
• SThree's three-year loss to shareholders was 28% while its EPS grew by 6.9% over the past three years

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The underwhelming share price performance of SThree plc (LON:STEM) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 29th of April could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. 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 SThree

Comparing SThree plc's CEO Compensation With The Industry

At the time of writing, our data shows that SThree plc has a market capitalization of UK£302m, and reported total annual CEO compensation of UK£947k for the year to November 2024. That is, the compensation was roughly the same as last year. We note that the salary of UK£510.9k makes up a sizeable portion of the total compensation received by the CEO.

For comparison, other companies in the British Professional Services industry with market capitalizations ranging between UK£149m and UK£597m had a median total CEO compensation of UK£637k. Hence, we can conclude that Timo Lehne is remunerated higher than the industry median. Furthermore, Timo Lehne directly owns UK£812k worth of shares in the company.

Component	2024	2023	Proportion (2024)
Salary	UK£511k	UK£501k	54%
Other	UK£436k	UK£445k	46%
Total Compensation	UK£947k	UK£946k	100%

On an industry level, around 56% of total compensation represents salary and 44% is other remuneration. Our data reveals that SThree allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

SThree plc's Growth

SThree plc has seen its earnings per share (EPS) increase by 6.9% a year over the past three years. It saw its revenue drop 10% over the last year.

We generally like to see a little revenue growth, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 SThree plc Been A Good Investment?

Since shareholders would have lost about 28% over three years, some SThree plc investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for SThree (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the 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.