What We Learned About Serneke Group's (STO:SRNKE B) CEO Pay

Ola Serneke became the CEO of Serneke Group AB (publ) (STO:SRNKE B) in 2008, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Serneke Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Serneke Group

How Does Total Compensation For Ola Serneke Compare With Other Companies In The Industry?

At the time of writing, our data shows that Serneke Group AB (publ) has a market capitalization of kr1.2b, and reported total annual CEO compensation of kr4.1m for the year to December 2019. That's just a smallish increase of 3.0% on last year. We note that the salary portion, which stands at kr3.93m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between kr820m and kr3.3b had a median total CEO compensation of kr4.8m. From this we gather that Ola Serneke is paid around the median for CEOs in the industry.

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Investors will find it interesting that Serneke Group pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Serneke Group AB (publ)'s Growth Numbers

Over the last three years, Serneke Group AB (publ) has shrunk its earnings per share by 57% per year. In the last year, its revenue is up 7.6%.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Serneke Group AB (publ) Been A Good Investment?

With a three year total loss of 36% for the shareholders, Serneke Group AB (publ) would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Serneke Group pays its CEO a majority of compensation through a salary. As previously discussed, Ola is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for Serneke Group (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Serneke 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. 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.
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