Jörgen Zahlin became the CEO of OEM International AB (publ) (STO:OEM B) in 2002, and we think it’s a good time to look at 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.
Comparing OEM International AB (publ)’s CEO Compensation With the industry
Our data indicates that OEM International AB (publ) has a market capitalization of kr5.7b, and total annual CEO compensation was reported as kr7.1m for the year to December 2019. That’s just a smallish increase of 6.0% on last year. Notably, the salary which is kr4.00m, represents most of the total compensation being paid.
For comparison, other companies in the same industry with market capitalizations ranging between kr3.5b and kr14b had a median total CEO compensation of kr6.9m. So it looks like OEM International compensates Jörgen Zahlin in line with the median for the industry. Moreover, Jörgen Zahlin also holds kr9.8m worth of OEM International stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 62% of total compensation represents salary and 38% is other remuneration. Although there is a difference in how total compensation is set, OEM International more or less reflects the market in terms of setting the salary. 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 OEM International AB (publ)’s Growth Numbers
Over the past three years, OEM International AB (publ) has seen its earnings per share (EPS) grow by 12% per year. The trailing twelve months of revenue was pretty much the same as the prior period.
Shareholders would be glad to know that the company has improved itself over the last few years. It’s nice to see revenue heading northwards, as this is consistent with healthy business conditions. Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has OEM International AB (publ) Been A Good Investment?
Boasting a total shareholder return of 46% over three years, OEM International AB (publ) has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
As we touched on above, OEM International AB (publ) is currently paying a compensation that’s close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company is growing EPS and total shareholder returns have been pleasing. So one could argue that CEO compensation is quite modest, if you consider company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
Shareholders may want to check for free if OEM International insiders are buying or selling shares.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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.
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