Shareholders Will Probably Hold Off On Increasing Photon Energy N.V.'s (WSE:PEN) CEO Compensation For The Time Being

Key Insights

• Photon Energy to hold its Annual General Meeting on 14th of June
• CEO Georg Hotar's total compensation includes salary of €355.0k
• The overall pay is 88% above the industry average
• Photon Energy's EPS grew by 5.2% over the past three years while total shareholder loss over the past three years was 42%

In the past three years, the share price of Photon Energy N.V. (WSE:PEN) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 14th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Photon Energy

How Does Total Compensation For Georg Hotar Compare With Other Companies In The Industry?

Our data indicates that Photon Energy N.V. has a market capitalization of zł443m, and total annual CEO compensation was reported as €355k for the year to December 2023. We note that's a decrease of 21% compared to last year. It is worth noting that the CEO compensation consists entirely of the salary, worth €355k.

On comparing similar-sized companies in the Poland Electrical industry with market capitalizations below zł798m, we found that the median total CEO compensation was €189k. Hence, we can conclude that Georg Hotar is remunerated higher than the industry median. Furthermore, Georg Hotar directly owns zł575k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	€355k	€350k	100%
Other	-	€97k	-
Total Compensation	€355k	€447k	100%

On an industry level, roughly 49% of total compensation represents salary and 51% is other remuneration. At the company level, Photon Energy pays Georg Hotar solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Photon Energy N.V.'s Growth

Photon Energy N.V.'s earnings per share (EPS) grew 5.2% per year over the last three years. It saw its revenue drop 35% over the last year.

We would prefer it if there was revenue growth, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Photon Energy N.V. Been A Good Investment?

With a total shareholder return of -42% over three years, Photon Energy N.V. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Photon Energy pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Photon Energy 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.