Increases to CEO Compensation Might Be Put On Hold For Now at AFC Ajax NV (AMS:AJAX)

Key Insights

• AFC Ajax's Annual General Meeting to take place on 16th of December
• Salary of €400.0k is part of CEO Menno Geelen's total remuneration
• Total compensation is 31% above industry average
• AFC Ajax's three-year loss to shareholders was 33% while its EPS grew by 45% over the past three years

Shareholders of AFC Ajax NV (AMS:AJAX) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 16th of December. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for AFC Ajax

How Does Total Compensation For Menno Geelen Compare With Other Companies In The Industry?

According to our data, AFC Ajax NV has a market capitalization of €181m, and paid its CEO total annual compensation worth €725k over the year to June 2024. Notably, that's an increase of 16% over the year before. Notably, the salary which is €400.0k, represents a considerable chunk of the total compensation being paid.

On comparing similar companies from the the Netherlands Entertainment industry with market caps ranging from €95m to €379m, we found that the median CEO total compensation was €555k. Accordingly, our analysis reveals that AFC Ajax NV pays Menno Geelen north of the industry median.

Component	2024	2023	Proportion (2024)
Salary	€400k	€370k	55%
Other	€325k	€254k	45%
Total Compensation	€725k	€624k	100%

On an industry level, roughly 75% of total compensation represents salary and 25% is other remuneration. AFC Ajax sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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 AFC Ajax NV's Growth Numbers

AFC Ajax NV has seen its earnings per share (EPS) increase by 45% a year over the past three years. Its revenue is down 23% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 AFC Ajax NV Been A Good Investment?

Few AFC Ajax NV shareholders would feel satisfied with the return of -33% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for AFC Ajax that investors should think about before committing capital to this stock.

Switching gears from AFC Ajax, 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.