Shareholders May Find It Hard To Justify Increasing Arise AB (publ)'s (STO:ARISE) CEO Compensation For Now

Key Insights

• Arise to hold its Annual General Meeting on 7th of May
• Salary of kr2.80m is part of CEO Per-Erik Eriksson's total remuneration
• Total compensation is similar to the industry average
• Arise's EPS grew by 79% over the past three years while total shareholder loss over the past three years was 23%

Shareholders of Arise AB (publ) (STO:ARISE) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 7th of May. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Arise

How Does Total Compensation For Per-Erik Eriksson Compare With Other Companies In The Industry?

At the time of writing, our data shows that Arise AB (publ) has a market capitalization of kr1.7b, and reported total annual CEO compensation of kr6.5m for the year to December 2023. Notably, that's an increase of 8.3% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at kr2.8m.

In comparison with other companies in the Sweden Renewable Energy industry with market capitalizations ranging from kr1.1b to kr4.4b, the reported median CEO total compensation was kr6.0m. From this we gather that Per-Erik Eriksson is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	kr2.8m	kr2.6m	43%
Other	kr3.7m	kr3.4m	57%
Total Compensation	kr6.5m	kr6.0m	100%

On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. In Arise's case, non-salary compensation represents a greater slice of total remuneration, 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.

Arise AB (publ)'s Growth

Over the past three years, Arise AB (publ) has seen its earnings per share (EPS) grow by 79% per year. In the last year, its revenue is down 57%.

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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Arise AB (publ) Been A Good Investment?

Since shareholders would have lost about 23% over three years, some Arise AB (publ) investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 Arise that investors should think about before committing capital to this stock.

Important note: Arise is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.