We think AB SKF (publ)'s (STO:SKF B) CEO May Struggle To See Much Of A Pay Rise This Year

Key Insights

• AB SKF to hold its Annual General Meeting on 26th of March
• CEO Gusta Gustafson's total compensation includes salary of kr15.8m
• Total compensation is similar to the industry average
• AB SKF's EPS grew by 14% over the past three years while total shareholder return over the past three years was 3.3%

Performance at AB SKF (publ) (STO:SKF B) has been reasonably good and CEO Gusta Gustafson has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 26th of March. We present our case of why we think CEO compensation looks fair.

See our latest analysis for AB SKF

How Does Total Compensation For Gusta Gustafson Compare With Other Companies In The Industry?

At the time of writing, our data shows that AB SKF (publ) has a market capitalization of kr104b, and reported total annual CEO compensation of kr35m for the year to December 2023. Notably, that's an increase of 13% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at kr16m.

For comparison, other companies in the Swedish Machinery industry with market capitalizations above kr83b, reported a median total CEO compensation of kr37m. So it looks like AB SKF compensates Gusta Gustafson in line with the median for the industry. What's more, Gusta Gustafson holds kr2.2m worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	kr16m	kr15m	45%
Other	kr19m	kr16m	55%
Total Compensation	kr35m	kr31m	100%

On an industry level, roughly 52% of total compensation represents salary and 48% is other remuneration. It's interesting to note that AB SKF allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

AB SKF (publ)'s Growth

Over the past three years, AB SKF (publ) has seen its earnings per share (EPS) grow by 14% per year. In the last year, its revenue is up 7.2%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has AB SKF (publ) Been A Good Investment?

AB SKF (publ) has not done too badly by shareholders, with a total return of 3.3%, over three years. It would be nice to see that metric improve in the future. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for AB SKF that you should be aware of before investing.

Important note: AB SKF is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.