Shareholders May Not Be So Generous With Alro S.A.'s (BVB:ALR) CEO Compensation And Here's Why

In the past three years, the share price of Alro S.A. (BVB:ALR) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 22 November 2022. 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.

View our latest analysis for Alro

How Does Total Compensation For Gheorghe Dobra Compare With Other Companies In The Industry?

At the time of writing, our data shows that Alro S.A. has a market capitalization of RON1.1b, and reported total annual CEO compensation of RON2.4m for the year to December 2021. That's a notable decrease of 15% on last year. We note that the salary of RON1.38m makes up a sizeable portion of the total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from RON473m to RON1.9b, the reported median CEO total compensation was RON2.5m. This suggests that Alro remunerates its CEO largely in line with the industry average.

Component	2021	2020	Proportion (2021)
Salary	RON1.4m	RON2.3m	57%
Other	RON1.0m	RON569k	43%
Total Compensation	RON2.4m	RON2.8m	100%

Speaking on an industry level, nearly 58% of total compensation represents salary, while the remainder of 42% is other remuneration. Although there is a difference in how total compensation is set, Alro more or less reflects the market in terms of setting the salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Alro S.A.'s Growth Numbers

Alro S.A. has seen its earnings per share (EPS) increase by 9.6% a year over the past three years. In the last year, its revenue is up 31%.

It's hard to interpret the strong revenue growth as anything other than a positive. Combined with modest EPS growth, we get a good impression of the company. We wouldn't say this is necessarily top notch growth, but it is certainly promising. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Alro S.A. Been A Good Investment?

Given the total shareholder loss of 30% over three years, many shareholders in Alro S.A. are probably rather dissatisfied, to say the least. 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 stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Alro that investors should look into moving forward.

Important note: Alro 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.