Shareholders May Be Wary Of Increasing Garo Aktiebolag (publ)'s (STO:GARO) CEO Compensation Package

Key Insights

• Garo Aktiebolag's Annual General Meeting to take place on 14th of May
• CEO Patrik Andersson's total compensation includes salary of kr2.10m
• The overall pay is 39% above the industry average
• Over the past three years, Garo Aktiebolag's EPS fell by 31% and over the past three years, the total loss to shareholders 74%

The results at Garo Aktiebolag (publ) (STO:GARO) have been quite disappointing recently and CEO Patrik Andersson bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 14th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Garo Aktiebolag

Comparing Garo Aktiebolag (publ)'s CEO Compensation With The Industry

According to our data, Garo Aktiebolag (publ) has a market capitalization of kr1.6b, and paid its CEO total annual compensation worth kr3.6m over the year to December 2023. That's just a smallish increase of 5.9% on last year. In particular, the salary of kr2.10m, makes up a fairly large portion of the total compensation being paid to the CEO.

For comparison, other companies in the Swedish Electrical industry with market capitalizations below kr2.2b, reported a median total CEO compensation of kr2.6m. This suggests that Patrik Andersson is paid more than the median for the industry. Furthermore, Patrik Andersson directly owns kr6.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	kr2.1m	kr2.4m	58%
Other	kr1.5m	kr1.0m	42%
Total Compensation	kr3.6m	kr3.4m	100%

On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. Garo Aktiebolag pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Garo Aktiebolag (publ)'s Growth Numbers

Over the last three years, Garo Aktiebolag (publ) has shrunk its earnings per share by 31% per year. In the last year, its revenue is down 1.5%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Garo Aktiebolag (publ) Been A Good Investment?

With a total shareholder return of -74% over three years, Garo Aktiebolag (publ) shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Garo Aktiebolag that investors should think about before committing capital to this stock.

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.