Shareholders Will Probably Not Have Any Issues With Marel hf.'s (ICE:MAREL) CEO Compensation

The share price of Marel hf. (ICE:MAREL) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. The upcoming AGM on 16 March 2022 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Marel hf

How Does Total Compensation For Arni Thordarson Compare With Other Companies In The Industry?

At the time of writing, our data shows that Marel hf. has a market capitalization of Kr521b, and reported total annual CEO compensation of €1.4m for the year to December 2021. That's a slight decrease of 5.8% on the prior year. We note that the salary of €728.0k makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from Kr264b to Kr846b, we found that the median CEO total compensation was €1.7m. So it looks like Marel hf compensates Arni Thordarson in line with the median for the industry. What's more, Arni Thordarson holds Kr164m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	€728k	€706k	51%
Other	€693k	€803k	49%
Total Compensation	€1.4m	€1.5m	100%

Speaking on an industry level, nearly 56% of total compensation represents salary, while the remainder of 44% is other remuneration. Although there is a difference in how total compensation is set, Marel hf more or less reflects the market in terms of setting the salary. 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 Marel hf.'s Growth Numbers

Over the last three years, Marel hf. has shrunk its earnings per share by 11% per year. It achieved revenue growth of 9.9% 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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Marel hf. Been A Good Investment?

Most shareholders would probably be pleased with Marel hf. for providing a total return of 46% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Marel hf that investors should be aware of in a dynamic business environment.

Switching gears from Marel hf, 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.

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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.