We Discuss Why Yara International ASA's (OB:YAR) CEO Will Find It Hard To Get A Pay Rise From Shareholders This Year

Key Insights

• Yara International will host its Annual General Meeting on 28th of May
• Salary of US$699.0k is part of CEO Svein Tore Holsether's total remuneration
• The overall pay is 53% below the industry average
• Yara International's EPS declined by 13% over the past three years while total shareholder loss over the past three years was 1.3%

The underwhelming performance at Yara International ASA (OB:YAR) recently has probably not pleased shareholders. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 28th of May. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

Check out our latest analysis for Yara International

How Does Total Compensation For Svein Tore Holsether Compare With Other Companies In The Industry?

Our data indicates that Yara International ASA has a market capitalization of kr83b, and total annual CEO compensation was reported as US$1.4m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at US$699k.

For comparison, other companies in the Norwegian Chemicals industry with market capitalizations ranging between kr43b and kr128b had a median total CEO compensation of US$3.1m. That is to say, Svein Tore Holsether is paid under the industry median. Furthermore, Svein Tore Holsether directly owns kr19m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$699k	US$701k	48%
Other	US$745k	US$742k	52%
Total Compensation	US$1.4m	US$1.4m	100%

Speaking on an industry level, nearly 47% of total compensation represents salary, while the remainder of 53% is other remuneration. Although there is a difference in how total compensation is set, Yara International more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Yara International ASA's Growth

Over the last three years, Yara International ASA has shrunk its earnings per share by 13% per year. It saw its revenue drop 34% over the last year.

Overall this is not a very positive result for shareholders. 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. 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 Yara International ASA Been A Good Investment?

Since shareholders would have lost about 1.3% over three years, some Yara International ASA investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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.

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. That's why we did some digging and identified 1 warning sign for Yara International that investors should think about before committing capital to this stock.

Important note: Yara International 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.

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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.