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Is G5 Entertainment AB (publ)'s (STO:G5EN) CEO Being Overpaid?

Simply Wall St

Vlad Suglobov is the CEO of G5 Entertainment AB (publ) (STO:G5EN). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for G5 Entertainment

How Does Vlad Suglobov's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that G5 Entertainment AB (publ) has a market cap of kr1.1b, and reported total annual CEO compensation of kr6.2m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at kr3.6m. We took a group of companies with market capitalizations below kr2.0b, and calculated the median CEO total compensation to be kr2.1m.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where G5 Entertainment stands. On a sector level, around 61% of total compensation represents salary and 39% is other remuneration. So it seems like there isn't a significant difference between G5 Entertainment and the broader market, in terms of salary allocation in the overall compensation package.

Thus we can conclude that Vlad Suglobov receives more in total compensation than the median of a group of companies in the same market, and of similar size to G5 Entertainment AB (publ). However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see a visual representation of the CEO compensation at G5 Entertainment, below.

OM:G5EN CEO Compensation April 8th 2020

Is G5 Entertainment AB (publ) Growing?

G5 Entertainment AB (publ) has seen earnings per share (EPS) move positively by an average of 11% a year, over the last three years (using a line of best fit). It saw its revenue drop 15% over the last year.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. You might want to check this free visual report on analyst forecasts for future earnings.

Has G5 Entertainment AB (publ) Been A Good Investment?

Given the total loss of 42% over three years, many shareholders in G5 Entertainment AB (publ) are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We examined the amount G5 Entertainment AB (publ) pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. Considering positive per-share earnings movement, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Looking into other areas, we've picked out 3 warning signs for G5 Entertainment that investors should think about before committing capital to this stock.

Important note: G5 Entertainment may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.