How Does Tomra Systems' (OB:TOM) CEO Salary Compare to Peers?

Stefan Ranstrand has been the CEO of Tomra Systems ASA (OB:TOM) since 2009, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Tomra Systems

Comparing Tomra Systems ASA's CEO Compensation With the industry

At the time of writing, our data shows that Tomra Systems ASA has a market capitalization of kr58b, and reported total annual CEO compensation of kr8.4m for the year to December 2019. That's a notable decrease of 13% on last year. We note that the salary portion, which stands at kr5.78m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from kr35b to kr105b, we found that the median CEO total compensation was kr23m. Accordingly, Tomra Systems pays its CEO under the industry median. Moreover, Stefan Ranstrand also holds kr56m worth of Tomra Systems 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 68% of total compensation represents salary and 32% is other remuneration. There isn't a significant difference between Tomra Systems and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Tomra Systems ASA's Growth Numbers

Tomra Systems ASA has seen its earnings per share (EPS) increase by 3.8% a year over the past three years. Its revenue is up 5.7% over the last year.

We'd prefer higher revenue growth, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Tomra Systems ASA Been A Good Investment?

We think that the total shareholder return of 230%, over three years, would leave most Tomra Systems ASA shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As previously discussed, Stefan is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. In contrast, shareholder returns have been excellent over the past three years, and that’s certainly a promising trend to keep an eye on. As a result of the juicy return to investors, CEO compensation may well be quite reasonable.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Tomra Systems that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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