Does ABB Ltd’s (VTX:ABBN) CEO Salary Reflect Performance?

In 2013 Uli Spiesshofer was appointed CEO of ABB Ltd (VTX:ABBN). This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

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How Does Uli Spiesshofer’s Compensation Compare With Similar Sized Companies?

According to our data, ABB Ltd has a market capitalization of CHF41b, and pays its CEO total annual compensation worth US$5.6m. (This figure is for the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.7m. We took a group of companies with market capitalizations over CHF8.0b, and calculated the median CEO compensation to be CHF4.8m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).

So Uli Spiesshofer receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

You can see a visual representation of the CEO compensation at ABB, below.

SWX:ABBN CEO Compensation January 31st 19
SWX:ABBN CEO Compensation January 31st 19

Is ABB Ltd Growing?

Over the last three years ABB Ltd has grown its earnings per share (EPS) by an average of 6.5% per year (using a line of best fit). It achieved revenue growth of 6.0% over the last year.

I’m not particularly impressed by the revenue growth, but it is good to see modest EPS growth. It’s clear the performance has been quite decent, but it it falls short of outstanding,based on this information.

It could be important to check this free visual depiction of what analysts expect for the future.

Has ABB Ltd Been A Good Investment?

With a total shareholder return of 23% over three years, ABB Ltd shareholders would, in general, 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.

In Summary…

Remuneration for Uli Spiesshofer is close enough to the median pay for a CEO of a large company .

We see room for improved growth, as well as fairly unremarkable returns over the last three years. While the CEO may not be underpaid, we don’t think the pay is too generous either. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling ABB (free visualization of insider trades).

Of course, the past can be informative so you might be interested in considering this analytical visualization showing the company history of earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.