Karolinska Development AB (publ)'s (STO:KDEV) CEO Might Not Expect Shareholders To Be So Generous This Year

Karolinska Development AB (publ) (STO:KDEV) has not performed well recently and CEO Viktor Drvota 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 05 May 2021. 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Karolinska Development

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

Our data indicates that Karolinska Development AB (publ) has a market capitalization of kr274m, and total annual CEO compensation was reported as kr5.4m for the year to December 2020. We note that's a decrease of 10% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at kr2.7m.

In comparison with other companies in the industry with market capitalizations under kr1.7b, the reported median total CEO compensation was kr3.2m. Accordingly, our analysis reveals that Karolinska Development AB (publ) pays Viktor Drvota north of the industry median.

On an industry level, around 62% of total compensation represents salary and 38% is other remuneration. It's interesting to note that Karolinska Development allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Karolinska Development AB (publ)'s Growth Numbers

Over the last three years, Karolinska Development AB (publ) has shrunk its earnings per share by 52% per year. In the last year, its revenue is down 22%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Karolinska Development AB (publ) Been A Good Investment?

The return of -76% over three years would not have pleased Karolinska Development AB (publ) shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for Karolinska Development you should be aware of, and 1 of them shouldn't be ignored.

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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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