Shareholders May Not Be So Generous With Bufab AB (publ)'s (STO:BUFAB) CEO Compensation And Here's Why

Key Insights

• Bufab to hold its Annual General Meeting on 24th of April
• CEO Erik Lunden's total compensation includes salary of kr5.40m
• The overall pay is comparable to the industry average
• Bufab's EPS grew by 5.0% over the past three years while total shareholder loss over the past three years was 1.4%

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As many shareholders of Bufab AB (publ) (STO:BUFAB) will be aware, they have not made a gain on their investment in the past three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 24th of April. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Bufab

How Does Total Compensation For Erik Lunden Compare With Other Companies In The Industry?

Our data indicates that Bufab AB (publ) has a market capitalization of kr14b, and total annual CEO compensation was reported as kr9.8m for the year to December 2024. That's a notable increase of 21% on last year. We note that the salary of kr5.40m makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar companies from the Swedish Trade Distributors industry with market caps ranging from kr9.6b to kr31b, we found that the median CEO total compensation was kr11m. This suggests that Bufab remunerates its CEO largely in line with the industry average. What's more, Erik Lunden holds kr1.4m worth of shares in the company in their own name.

Talking in terms of the industry, salary represented approximately 62% of total compensation out of all the companies we analyzed, while other remuneration made up 38% of the pie. In Bufab's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Bufab AB (publ)'s Growth

Bufab AB (publ)'s earnings per share (EPS) grew 5.0% per year over the last three years. Its revenue is down 7.4% over the previous year.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Bufab AB (publ) Been A Good Investment?

Given the total shareholder loss of 1.4% over three years, many shareholders in Bufab AB (publ) are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

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 probably be keen to find out what are the other factors could be weighing down the stock. 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.

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. We've identified 2 warning signs for Bufab that investors should be aware of in a dynamic business environment.

Switching gears from Bufab, 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.