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Henrik Lange became the CEO of Gunnebo AB (STO:GUNN) in 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Henrik Lange’s Compensation Compare With Similar Sized Companies?
According to our data, Gunnebo AB has a market capitalization of kr1.8b, and pays its CEO total annual compensation worth kr9.6m. (This number is for the twelve months until December 2017). We think total compensation is more important but we note that the CEO salary is lower, at kr6.8m. When we examined a selection of companies with market caps ranging from kr935m to kr3.7b, we found the median CEO compensation was kr3.6m.
It would therefore appear that Gunnebo AB pays Henrik Lange more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration 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 Gunnebo has changed from year to year.
Is Gunnebo AB Growing?
On average over the last three years, Gunnebo AB has shrunk earnings per share by 12% each year (measured with a line of best fit). Its revenue is down -14% over last year.
Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Gunnebo AB Been A Good Investment?
Given the total loss of 34% over three years, many shareholders in Gunnebo AB are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at Gunnebo AB with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.We think many shareholders would be underwhelmed with the business growth over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! Shareholders may want to check for free if Gunnebo insiders are buying or selling shares.
Important note: Gunnebo may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.