We Discuss Why Signify N.V.'s (AMS:LIGHT) CEO Compensation May Be Closely Reviewed

Key Insights

• Signify to hold its Annual General Meeting on 14th of May
• CEO Eric H. Rondolat's total compensation includes salary of €985.2k
• The overall pay is comparable to the industry average
• Over the past three years, Signify's EPS fell by 14% and over the past three years, the total loss to shareholders 37%

Signify N.V. (AMS:LIGHT) has not performed well recently and CEO Eric H. Rondolat will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 14th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Signify

How Does Total Compensation For Eric H. Rondolat Compare With Other Companies In The Industry?

At the time of writing, our data shows that Signify N.V. has a market capitalization of €3.4b, and reported total annual CEO compensation of €2.3m for the year to December 2023. Notably, that's an increase of 12% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at €985k.

On examining similar-sized companies in the the Netherlands Electrical industry with market capitalizations between €1.9b and €6.0b, we discovered that the median CEO total compensation of that group was €1.9m. From this we gather that Eric H. Rondolat is paid around the median for CEOs in the industry. Furthermore, Eric H. Rondolat directly owns €7.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	€985k	€947k	43%
Other	€1.3m	€1.1m	57%
Total Compensation	€2.3m	€2.0m	100%

Speaking on an industry level, nearly 49% of total compensation represents salary, while the remainder of 51% is other remuneration. Signify sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Signify N.V.'s Growth Numbers

Over the last three years, Signify N.V. has shrunk its earnings per share by 14% per year. In the last year, its revenue is down 12%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Signify N.V. Been A Good Investment?

The return of -37% over three years would not have pleased Signify N.V. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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, the board will get the chance to explain the steps it plans to take to improve business performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Signify that investors should be aware of in a dynamic business environment.

Important note: Signify 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.