In 2013 Mika Vehviläinen was appointed CEO of Cargotec Corporation (HEL:CGCBV). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Mika Vehviläinen’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Cargotec Corporation has a market cap of €2.0b, and reported total annual CEO compensation of €3.4m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at €701k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from €903m to €2.9b, and discovered that the median CEO total compensation of that group was €1.1m.
Thus we can conclude that Mika Vehviläinen receives more in total compensation than the median of a group of companies in the same market, and of similar size to Cargotec Corporation. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Cargotec has changed from year to year.
Is Cargotec Corporation Growing?
On average over the last three years, Cargotec Corporation has shrunk earnings per share by 9.8% each year (measured with a line of best fit). It achieved revenue growth of 8.4% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.
Has Cargotec Corporation Been A Good Investment?
Since shareholders would have lost about 16% over three years, some Cargotec Corporation shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Cargotec Corporation pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. Over the same period, investors would have come away with nothing in the way of share price gains. In our opinion the CEO might be paid too generously! So you may want to check if insiders are buying Cargotec shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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