We Think Shareholders May Want To Consider A Review Of Arjo AB (publ)'s (STO:ARJO B) CEO Compensation Package

Key Insights

• Arjo will host its Annual General Meeting on 18th of April
• Total pay for CEO Joacim Lindoff includes kr9.54m salary
• The overall pay is comparable to the industry average
• Arjo's EPS declined by 3.0% over the past three years while total shareholder loss over the past three years was 19%

Arjo AB (publ) (STO:ARJO B) has not performed well recently and CEO Joacim Lindoff will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 18th of April. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Arjo

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

Our data indicates that Arjo AB (publ) has a market capitalization of kr14b, and total annual CEO compensation was reported as kr17m for the year to December 2023. That's a notable increase of 38% on last year. In particular, the salary of kr9.54m, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the Swedish Medical Equipment industry with market caps ranging from kr11b to kr34b, we found that the median CEO total compensation was kr18m. From this we gather that Joacim Lindoff is paid around the median for CEOs in the industry. What's more, Joacim Lindoff holds kr17m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	kr9.5m	kr9.1m	56%
Other	kr7.5m	kr3.3m	44%
Total Compensation	kr17m	kr12m	100%

Talking in terms of the industry, salary represented approximately 72% of total compensation out of all the companies we analyzed, while other remuneration made up 28% of the pie. Arjo sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Arjo AB (publ)'s Growth

Over the last three years, Arjo AB (publ) has shrunk its earnings per share by 3.0% per year. In the last year, its revenue is up 10%.

Overall this is not a very positive result for shareholders. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Arjo AB (publ) Been A Good Investment?

With a three year total loss of 19% for the shareholders, Arjo AB (publ) would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 Arjo that investors should be aware of in a dynamic business environment.

Switching gears from Arjo, 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. 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.