Here's Why Swedbank AB (publ)'s (STO:SWED A) CEO May Deserve A Raise

Key Insights

• Swedbank will host its Annual General Meeting on 26th of March
• Salary of kr13.9m is part of CEO Jens Henriksson's total remuneration
• The total compensation is 41% less than the average for the industry
• Swedbank's total shareholder return over the past three years was 72% while its EPS grew by 38% over the past three years

The solid performance at Swedbank AB (publ) (STO:SWED A) has been impressive and shareholders will probably be pleased to know that CEO Jens Henriksson has delivered. At the upcoming AGM on 26th of March, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

Check out our latest analysis for Swedbank

Comparing Swedbank AB (publ)'s CEO Compensation With The Industry

At the time of writing, our data shows that Swedbank AB (publ) has a market capitalization of kr255b, and reported total annual CEO compensation of kr18m for the year to December 2023. This means that the compensation hasn't changed much from last year. In particular, the salary of kr13.9m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Swedish Banks industry with market capitalizations above kr83b, reported a median total CEO compensation of kr30m. Accordingly, Swedbank pays its CEO under the industry median. Moreover, Jens Henriksson also holds kr9.1m worth of Swedbank stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	kr14m	kr14m	77%
Other	kr4.1m	kr4.2m	23%
Total Compensation	kr18m	kr18m	100%

Talking in terms of the industry, salary represented approximately 61% of total compensation out of all the companies we analyzed, while other remuneration made up 39% of the pie. Swedbank pays out 77% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Swedbank AB (publ)'s Growth

Swedbank AB (publ)'s earnings per share (EPS) grew 38% per year over the last three years. Its revenue is up 41% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Swedbank AB (publ) Been A Good Investment?

We think that the total shareholder return of 72%, over three years, would leave most Swedbank AB (publ) shareholders smiling. 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.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which is concerning) in Swedbank we think you should know about.

Switching gears from Swedbank, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.