Here's Why Fagerhult Group AB's (STO:FAG) CEO Compensation Is The Least Of Shareholders' Concerns

Key Insights

• Fagerhult Group's Annual General Meeting to take place on 2nd of May
• Total pay for CEO Bodil Gallon includes kr5.80m salary
• The overall pay is comparable to the industry average
• Fagerhult Group's EPS declined by 1.3% over the past three years while total shareholder return over the past three years was 33%

Despite Fagerhult Group AB's (STO:FAG) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. Some of these issues will occupy shareholders' minds as the AGM rolls around on 2nd of May. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Fagerhult Group

Comparing Fagerhult Group AB's CEO Compensation With The Industry

Our data indicates that Fagerhult Group AB has a market capitalization of kr12b, and total annual CEO compensation was reported as kr7.9m for the year to December 2023. Notably, that's a decrease of 17% over the year before. In particular, the salary of kr5.80m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Swedish Electrical industry with market capitalizations ranging from kr4.4b to kr17b, the reported median CEO total compensation was kr8.3m. So it looks like Fagerhult Group compensates Bodil Gallon in line with the median for the industry. Furthermore, Bodil Gallon directly owns kr2.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	kr5.8m	kr5.1m	73%
Other	kr2.1m	kr4.4m	27%
Total Compensation	kr7.9m	kr9.5m	100%

On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. Fagerhult Group pays out 73% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Fagerhult Group AB's Growth

Over the last three years, Fagerhult Group AB has shrunk its earnings per share by 1.3% per year. It achieved revenue growth of 3.5% over the last year.

Its a bit disappointing to see that the company has failed to grow its EPS. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Fagerhult Group AB Been A Good Investment?

Fagerhult Group AB has served shareholders reasonably well, with a total return of 33% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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 Fagerhult Group that investors should look into moving forward.

Important note: Fagerhult Group 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.

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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.