Should Shareholders Reconsider Ratos AB (publ)'s (STO:RATO B) CEO Compensation Package?

Key Insights

• Ratos' Annual General Meeting to take place on 26th of March
• CEO Jonas Wistrom's total compensation includes salary of kr10.5m
• The total compensation is 84% higher than the average for the industry
• Ratos' three-year loss to shareholders was 21% while its EPS was down 36% over the past three years

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The results at Ratos AB (publ) (STO:RATO B) have been quite disappointing recently and CEO Jonas Wistrom bears some responsibility for this. At the upcoming AGM on 26th of March, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Ratos

Comparing Ratos AB (publ)'s CEO Compensation With The Industry

At the time of writing, our data shows that Ratos AB (publ) has a market capitalization of kr12b, and reported total annual CEO compensation of kr23m for the year to December 2024. We note that's a small decrease of 3.8% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at kr11m.

In comparison with other companies in the Swedish Capital Markets industry with market capitalizations ranging from kr4.0b to kr16b, the reported median CEO total compensation was kr13m. This suggests that Jonas Wistrom is paid more than the median for the industry. Furthermore, Jonas Wistrom directly owns kr14m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. Ratos sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

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

Ratos AB (publ) has reduced its earnings per share by 36% a year over the last three years. It saw its revenue drop 4.8% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Ratos AB (publ) Been A Good Investment?

Given the total shareholder loss of 21% over three years, many shareholders in Ratos AB (publ) are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO 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 is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Ratos that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.