Some Shareholders May find It Hard To Increase BioGaia AB (publ)'s (STO:BIOG B) CEO Compensation This Year

The share price of BioGaia AB (publ) (STO:BIOG B) has struggled to grow by much over the last few years and probably has to do with the fact that earnings growth has gone backwards. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 06 May 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for BioGaia

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

At the time of writing, our data shows that BioGaia AB (publ) has a market capitalization of kr8.4b, and reported total annual CEO compensation of kr3.2m for the year to December 2020. That's slightly lower by 3.4% over the previous year. We note that the salary portion, which stands at kr2.61m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from kr3.3b to kr13b, we found that the median CEO total compensation was kr4.0m. So it looks like BioGaia compensates Isabelle Valerie Ducellier in line with the median for the industry. Moreover, Isabelle Valerie Ducellier also holds kr1.3m worth of BioGaia stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	kr2.6m	kr2.4m	81%
Other	kr609k	kr909k	19%
Total Compensation	kr3.2m	kr3.3m	100%

On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. BioGaia pays out 81% of remuneration in the form of a salary, significantly higher than the industry average. 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.

BioGaia AB (publ)'s Growth

Over the last three years, BioGaia AB (publ) has shrunk its earnings per share by 1.1% per year. In the last year, its revenue is down 2.8%.

Its a bit disappointing to see that the company has failed to grow its EPS. 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. 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 BioGaia AB (publ) Been A Good Investment?

With a total shareholder return of 4.9% over three years, BioGaia AB (publ) has done okay by shareholders, but there's always room for improvement. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

While it's true that the share price growth hasn't been bad, it's hard to overlook the lack of earnings growth and this makes us question whether there will be any strong catalyst for the stock to improve. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for BioGaia that you should be aware of before investing.

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. 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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