Shareholders May Not Be So Generous With Orexo AB (publ)'s (STO:ORX) CEO Compensation And Here's Why

Key Insights

• Orexo to hold its Annual General Meeting on 8th of May
• CEO Nikolaj Sorensen's total compensation includes salary of kr3.86m
• The total compensation is 77% higher than the average for the industry
• Orexo's EPS grew by 18% over the past three years while total shareholder loss over the past three years was 14%

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In the past three years, shareholders of Orexo AB (publ) (STO:ORX) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 8th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Orexo

How Does Total Compensation For Nikolaj Sorensen Compare With Other Companies In The Industry?

At the time of writing, our data shows that Orexo AB (publ) has a market capitalization of kr543m, and reported total annual CEO compensation of kr7.5m for the year to December 2024. We note that's an increase of 22% above last year. In particular, the salary of kr3.86m, makes up a fairly large portion of the total compensation being paid to the CEO.

In comparison with other companies in the Swedish Pharmaceuticals industry with market capitalizations under kr1.9b, the reported median total CEO compensation was kr4.2m. This suggests that Nikolaj Sorensen is paid more than the median for the industry. Moreover, Nikolaj Sorensen also holds kr2.9m worth of Orexo stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. Orexo sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

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

Over the past three years, Orexo AB (publ) has seen its earnings per share (EPS) grow by 18% per year. It saw its revenue drop 7.6% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Orexo AB (publ) Been A Good Investment?

With a three year total loss of 14% for the shareholders, Orexo AB (publ) would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with 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. We did our research and identified 3 warning signs (and 1 which is potentially serious) in Orexo we think you should know about.

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. 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.