This Is Why Image Systems AB's (STO:IS) CEO Compensation Looks Appropriate

Key Insights

• Image Systems will host its Annual General Meeting on 8th of May
• CEO Johan Friberg's total compensation includes salary of kr1.60m
• The overall pay is comparable to the industry average
• Image Systems' total shareholder return over the past three years was 12% while its EPS grew by 75% over the past three years

Under the guidance of CEO Johan Friberg, Image Systems AB (STO:IS) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 8th of May. Here is our take on why we think the CEO compensation looks appropriate.

See our latest analysis for Image Systems

How Does Total Compensation For Johan Friberg Compare With Other Companies In The Industry?

At the time of writing, our data shows that Image Systems AB has a market capitalization of kr140m, and reported total annual CEO compensation of kr2.5m for the year to December 2023. That's a modest increase of 4.2% on the prior year. In particular, the salary of kr1.60m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Swedish Electronic industry with market capitalizations below kr2.2b, we found that the median total CEO compensation was kr2.5m. From this we gather that Johan Friberg is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	kr1.6m	kr1.6m	64%
Other	kr900k	kr800k	36%
Total Compensation	kr2.5m	kr2.4m	100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. There isn't a significant difference between Image Systems and the broader market, in terms of salary allocation in the overall compensation package. 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.

A Look at Image Systems AB's Growth Numbers

Over the past three years, Image Systems AB has seen its earnings per share (EPS) grow by 75% per year. Its revenue is down 7.4% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Image Systems AB Been A Good Investment?

Image Systems AB has generated a total shareholder return of 12% over three years, so most shareholders would be reasonably content. 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...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

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 1 warning sign for Image Systems that investors should think about before committing capital to this stock.

Switching gears from Image Systems, 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.