How Should Investors Feel About Arbona's (NGM:ARBO A) CEO Remuneration?

Martin Zetterström is the CEO of Arbona AB (publ) (NGM:ARBO A), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Arbona.

View our latest analysis for Arbona

How Does Total Compensation For Martin Zetterström Compare With Other Companies In The Industry?

Our data indicates that Arbona AB (publ) has a market capitalization of kr183m, and total annual CEO compensation was reported as kr1.4m for the year to December 2019. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at kr1.02m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below kr1.7b, reported a median total CEO compensation of kr3.4m. That is to say, Martin Zetterström is paid under the industry median.

On an industry level, roughly 39% of total compensation represents salary and 61% is other remuneration. Arbona is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Arbona AB (publ)'s Growth

Arbona AB (publ) has reduced its earnings per share by 29% a year over the last three years. Its revenue is down 24% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Arbona AB (publ) Been A Good Investment?

We think that the total shareholder return of 46%, over three years, would leave most Arbona AB (publ) shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

As we touched on above, Arbona AB (publ) is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. And while EPS growth is negative, shareholder returns have been healthy recently. We would like to see EPS growth, but in our view CEO compensation is modest.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Arbona that investors should be aware of in a dynamic business environment.

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. 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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