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

Key Insights

• HMS Networks to hold its Annual General Meeting on 24th of April
• CEO Staffan Dahlstrom's total compensation includes salary of kr4.85m
• Total compensation is 221% above industry average
• HMS Networks' EPS declined by 6.7% over the past three years while total shareholder loss over the past three years was 25%

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The results at HMS Networks AB (publ) (STO:HMS) have been quite disappointing recently and CEO Staffan Dahlstrom bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 24th 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for HMS Networks

How Does Total Compensation For Staffan Dahlstrom Compare With Other Companies In The Industry?

At the time of writing, our data shows that HMS Networks AB (publ) has a market capitalization of kr18b, and reported total annual CEO compensation of kr7.4m for the year to December 2024. That's a notable increase of 9.0% on last year. Notably, the salary which is kr4.85m, represents most of the total compensation being paid.

In comparison with other companies in the Swedish Communications industry with market capitalizations ranging from kr9.6b to kr31b, the reported median CEO total compensation was kr2.3m. Accordingly, our analysis reveals that HMS Networks AB (publ) pays Staffan Dahlstrom north of the industry median. What's more, Staffan Dahlstrom holds kr2.1b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	kr4.9m	kr4.0m	65%
Other	kr2.6m	kr2.8m	35%
Total Compensation	kr7.4m	kr6.8m	100%

On an industry level, roughly 67% of total compensation represents salary and 33% is other remuneration. HMS Networks is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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 HMS Networks AB (publ)'s Growth Numbers

HMS Networks AB (publ) has reduced its earnings per share by 6.7% a year over the last three years. It achieved revenue growth of 1.1% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. 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 HMS Networks AB (publ) Been A Good Investment?

Given the total shareholder loss of 25% over three years, many shareholders in HMS Networks AB (publ) are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

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

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for HMS Networks that investors should think about before committing capital to this stock.

Switching gears from HMS Networks, 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.