How Should Investors React To FM Mattsson Mora Group's (STO:FMM B) CEO Pay?

Fredrik Skarp became the CEO of FM Mattsson Mora Group AB (publ) (STO:FMM B) in 2016, 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.

Check out our latest analysis for FM Mattsson Mora Group

Comparing FM Mattsson Mora Group AB (publ)'s CEO Compensation With the industry

At the time of writing, our data shows that FM Mattsson Mora Group AB (publ) has a market capitalization of kr2.0b, and reported total annual CEO compensation of kr4.4m for the year to December 2019. Notably, that's an increase of 27% over the year before. We note that the salary portion, which stands at kr2.49m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from kr849m to kr3.4b, we found that the median CEO total compensation was kr6.7m. In other words, FM Mattsson Mora Group pays its CEO lower than the industry median. Furthermore, Fredrik Skarp directly owns kr2.4m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. FM Mattsson Mora Group is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

FM Mattsson Mora Group AB (publ)'s Growth

FM Mattsson Mora Group AB (publ) has seen its earnings per share (EPS) increase by 5.8% a year over the past three years. In the last year, its revenue is up 19%.

We think the revenue growth is good. And the improvement in EPSis modest but respectable. So while performance isn't amazing, we think it really does seem quite respectable. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has FM Mattsson Mora Group AB (publ) Been A Good Investment?

We think that the total shareholder return of 74%, over three years, would leave most FM Mattsson Mora Group 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...

As we touched on above, FM Mattsson Mora Group AB (publ) is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, shareholder returns have been have been very pleasing, over the last three years, and that should put a smile on the faces of investors. Considering this fine result for investors, we believe CEO compensation to be apt.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for FM Mattsson Mora Group that investors should think about before committing capital to this stock.

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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