We Discuss Why Bonava AB (publ)'s (STO:BONAV B) CEO Compensation May Be Closely Reviewed

Key Insights

• Bonava will host its Annual General Meeting on 10th of April
• Salary of kr8.71m is part of CEO Peter Wallin's total remuneration
• Total compensation is 44% above industry average
• Over the past three years, Bonava's EPS fell by 76% and over the past three years, the total loss to shareholders 81%

Bonava AB (publ) (STO:BONAV B) has not performed well recently and CEO Peter Wallin will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 10th of April. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Bonava

How Does Total Compensation For Peter Wallin Compare With Other Companies In The Industry?

At the time of writing, our data shows that Bonava AB (publ) has a market capitalization of kr3.3b, and reported total annual CEO compensation of kr13m for the year to December 2023. That's a modest increase of 4.3% on the prior year. In particular, the salary of kr8.71m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Swedish Consumer Durables industry with market capitalizations ranging from kr2.1b to kr8.5b, the reported median CEO total compensation was kr9.4m. This suggests that Peter Wallin is paid more than the median for the industry. What's more, Peter Wallin holds kr887k worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	kr8.7m	kr8.6m	65%
Other	kr4.8m	kr4.3m	35%
Total Compensation	kr13m	kr13m	100%

Speaking on an industry level, nearly 63% of total compensation represents salary, while the remainder of 37% is other remuneration. Our data reveals that Bonava allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Bonava AB (publ)'s Growth Numbers

Bonava AB (publ) has reduced its earnings per share by 76% a year over the last three years. It saw its revenue drop 5.1% over the last 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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Bonava AB (publ) Been A Good Investment?

With a total shareholder return of -81% over three years, Bonava AB (publ) shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for Bonava that investors should look into moving forward.

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.