We Discuss Why AKVA group ASA's (OB:AKVA) CEO Compensation May Be Closely Reviewed

Key Insights

• AKVA group will host its Annual General Meeting on 2nd of May
• Total pay for CEO Knut Nesse includes kr5.85m salary
• The overall pay is comparable to the industry average
• AKVA group's EPS declined by 89% over the past three years while total shareholder loss over the past three years was 25%

The results at AKVA group ASA (OB:AKVA) have been quite disappointing recently and CEO Knut Nesse bears some responsibility for this. At the upcoming AGM on 2nd of May, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for AKVA group

Comparing AKVA group ASA's CEO Compensation With The Industry

According to our data, AKVA group ASA has a market capitalization of kr2.4b, and paid its CEO total annual compensation worth kr6.1m over the year to December 2023. That's a notable increase of 95% on last year. In particular, the salary of kr5.85m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the Norwegian Machinery industry with market capitalizations between kr1.1b and kr4.4b, we discovered that the median CEO total compensation of that group was kr7.7m. So it looks like AKVA group compensates Knut Nesse in line with the median for the industry. Moreover, Knut Nesse also holds kr11m worth of AKVA group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	kr5.8m	kr2.9m	96%
Other	kr213k	kr213k	4%
Total Compensation	kr6.1m	kr3.1m	100%

Speaking on an industry level, nearly 74% of total compensation represents salary, while the remainder of 26% is other remuneration. AKVA group is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

AKVA group ASA's Growth

AKVA group ASA has reduced its earnings per share by 89% a year over the last three years. It achieved revenue growth of 2.9% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. 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 AKVA group ASA Been A Good Investment?

Since shareholders would have lost about 25% over three years, some AKVA group ASA investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Knut receives almost all of their compensation through a salary. Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for AKVA group that investors should think about before committing capital to this stock.

Important note: AKVA group 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.