This Is Why Shareholders May Want To Hold Back On A Pay Rise For Loomis AB (publ)'s (STO:LOOMIS) CEO

By
Simply Wall St
Published
May 01, 2021
OM:LOOMIS

Performance at Loomis AB (publ) (STO:LOOMIS) has not been particularly rosy recently and shareholders will likely be holding CEO Patrik Andersson and the board accountable for this. At the upcoming AGM on 06 May 2021, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

View our latest analysis for Loomis

Comparing Loomis AB (publ)'s CEO Compensation With the industry

Our data indicates that Loomis AB (publ) has a market capitalization of kr21b, and total annual CEO compensation was reported as kr10m for the year to December 2020. That's a notable increase of 38% on last year. We note that the salary portion, which stands at kr7.82m constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between kr17b and kr54b, we discovered that the median CEO total compensation of that group was kr24m. That is to say, Patrik Andersson is paid under the industry median. What's more, Patrik Andersson holds kr4.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary kr7.8m kr7.4m 77%
Other kr2.4m - 23%
Total Compensationkr10m kr7.4m100%

On an industry level, around 75% of total compensation represents salary and 25% is other remuneration. There isn't a significant difference between Loomis and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
OM:LOOMIS CEO Compensation May 1st 2021

Loomis AB (publ)'s Growth

Loomis AB (publ) has reduced its earnings per share by 21% a year over the last three years. Its revenue is down 11% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Loomis AB (publ) Been A Good Investment?

With a three year total loss of 10% for the shareholders, Loomis AB (publ) would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 6 warning signs for Loomis that investors should look into moving forward.

Switching gears from Loomis, 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. 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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