Increases to CEO Compensation Might Be Put On Hold For Now at Axactor ASA (OB:ACR)

Key Insights

• Axactor will host its Annual General Meeting on 8th of May
• Total pay for CEO Johnny Vasili includes €398.3k salary
• The total compensation is 130% higher than the average for the industry
• Axactor's three-year loss to shareholders was 48% while its EPS grew by 91% over the past three years

In the past three years, the share price of Axactor ASA (OB:ACR) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 8th of May. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Axactor

How Does Total Compensation For Johnny Vasili Compare With Other Companies In The Industry?

According to our data, Axactor ASA has a market capitalization of kr1.5b, and paid its CEO total annual compensation worth €700k over the year to December 2023. That's slightly lower by 5.1% over the previous year. Notably, the salary which is €398.3k, represents a considerable chunk of the total compensation being paid.

In comparison with other companies in the Norway Consumer Finance industry with market capitalizations under kr2.2b, the reported median total CEO compensation was €305k. Hence, we can conclude that Johnny Vasili is remunerated higher than the industry median. What's more, Johnny Vasili holds kr8.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	€398k	€408k	57%
Other	€302k	€330k	43%
Total Compensation	€700k	€738k	100%

On an industry level, roughly 57% of total compensation represents salary and 43% is other remuneration. There isn't a significant difference between Axactor and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Axactor ASA's Growth Numbers

Axactor ASA has seen its earnings per share (EPS) increase by 91% a year over the past three years. Its revenue is up 8.0% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Axactor ASA Been A Good Investment?

Few Axactor ASA shareholders would feel satisfied with the return of -48% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. 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.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for Axactor that investors should look into moving forward.

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.