We Discuss Why mBank S.A.'s (WSE:MBK) CEO Compensation May Be Closely Reviewed

mBank S.A. (WSE:MBK) has not performed well recently and CEO Cezary Stypulkowski will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 24 March 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for mBank

How Does Total Compensation For Cezary Stypulkowski Compare With Other Companies In The Industry?

According to our data, mBank S.A. has a market capitalization of zł9.6b, and paid its CEO total annual compensation worth zł4.8m over the year to December 2020. That is, the compensation was roughly the same as last year. Notably, the salary which is zł3.45m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from zł7.7b to zł25b, the reported median CEO total compensation was zł2.4m. Accordingly, our analysis reveals that mBank S.A. pays Cezary Stypulkowski north of the industry median. What's more, Cezary Stypulkowski holds zł5.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	zł3.4m	zł3.3m	71%
Other	zł1.4m	zł1.4m	29%
Total Compensation	zł4.8m	zł4.7m	100%

On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. Our data reveals that mBank allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

mBank S.A.'s Growth

mBank S.A. has reduced its earnings per share by 54% a year over the last three years. Its revenue is down 2.2% over the previous year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 mBank S.A. Been A Good Investment?

The return of -47% over three years would not have pleased mBank S.A. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid 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, 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 can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for mBank that investors should be aware of in a dynamic business environment.

Important note: mBank 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.

If you’re looking to trade mBank, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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