Why Provide IT Sweden's (NGM:PROVIT) CEO Pay Matters

The CEO of Provide IT Sweden AB (publ) (NGM:PROVIT) is Bawan Faraj, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Provide IT Sweden

Comparing Provide IT Sweden AB (publ)'s CEO Compensation With the industry

Our data indicates that Provide IT Sweden AB (publ) has a market capitalization of kr37m, and total annual CEO compensation was reported as kr754k for the year to March 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is kr720.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below kr1.7b, reported a median total CEO compensation of kr1.7m. This suggests that Bawan Faraj is paid below the industry median. Moreover, Bawan Faraj also holds kr11m worth of Provide IT Sweden stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 70% of total compensation out of all the companies we analyzed, while other remuneration made up 30% of the pie. Investors will find it interesting that Provide IT Sweden pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. 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 Provide IT Sweden AB (publ)'s Growth Numbers

Provide IT Sweden AB (publ) has reduced its earnings per share by 3.4% a year over the last three years. In the last year, its revenue is up 12%.

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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Provide IT Sweden AB (publ) Been A Good Investment?

With a total shareholder return of 1.7% over three years, Provide IT Sweden AB (publ) has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Bawan receives almost all of their compensation through a salary. As previously discussed, Bawan is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Shareholder returns have been uninspiring, but EPS growth has arguably been worse, over the last three years. It's tough for us to say that Bawan is earning a high compensation, but any bump in pay is unlikely at this stage since shareholders will likely hold off support until performance improves.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 5 warning signs for Provide IT Sweden you should be aware of, and 2 of them are significant.

Switching gears from Provide IT Sweden, 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.

If you’re looking to trade Provide IT Sweden, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.