Most Shareholders Will Probably Agree With Digi Communications N.V.'s (BVB:DIGI) CEO Compensation

Key Insights

• Digi Communications will host its Annual General Meeting on 12th of June
• Salary of €363.6k is part of CEO Serghei Bulgac's total remuneration
• Total compensation is 65% below industry average
• Digi Communications' EPS declined by 13% over the past three years while total shareholder return over the past three years was 92%

The performance at Digi Communications N.V. (BVB:DIGI) has been rather lacklustre of late and shareholders may be wondering what CEO Serghei Bulgac is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 12th of June. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Digi Communications

Comparing Digi Communications N.V.'s CEO Compensation With The Industry

At the time of writing, our data shows that Digi Communications N.V. has a market capitalization of RON6.3b, and reported total annual CEO compensation of €370k for the year to December 2023. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is €363.6k, represents most of the total compensation being paid.

On examining similar-sized companies in the Romania Telecom industry with market capitalizations between RON4.6b and RON15b, we discovered that the median CEO total compensation of that group was €1.1m. That is to say, Serghei Bulgac is paid under the industry median. What's more, Serghei Bulgac holds RON21m 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	€364k	€364k	98%
Other	€6.5k	€12k	2%
Total Compensation	€370k	€377k	100%

On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. Digi Communications pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Digi Communications N.V.'s Growth

Over the last three years, Digi Communications N.V. has shrunk its earnings per share by 13% per year. It achieved revenue growth of 13% over the last year.

The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. 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 Digi Communications N.V. Been A Good Investment?

Boasting a total shareholder return of 92% over three years, Digi Communications N.V. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Digi Communications pays its CEO a majority of compensation through a salary. Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 1 which is a bit concerning) in Digi Communications we think you should know about.

Switching gears from Digi Communications, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.