We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Ratos AB (publ)'s (STO:RATO B) CEO For Now

By
Simply Wall St
Published
March 16, 2022
OM:RATO B
Source: Shutterstock

Under the guidance of CEO Jonas Wistrom, Ratos AB (publ) (STO:RATO B) has performed reasonably well recently. As shareholders go into the upcoming AGM on 22 March 2022, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for Ratos

How Does Total Compensation For Jonas Wistrom Compare With Other Companies In The Industry?

At the time of writing, our data shows that Ratos AB (publ) has a market capitalization of kr17b, and reported total annual CEO compensation of kr22m for the year to December 2021. Notably, that's an increase of 21% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at kr8.9m.

For comparison, other companies in the same industry with market capitalizations ranging between kr9.6b and kr31b had a median total CEO compensation of kr16m. Hence, we can conclude that Jonas Wistrom is remunerated higher than the industry median. Furthermore, Jonas Wistrom directly owns kr14m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212020Proportion (2021)
Salary kr8.9m kr8.0m 40%
Other kr13m kr10m 60%
Total Compensationkr22m kr18m100%

On an industry level, roughly 81% of total compensation represents salary and 19% is other remuneration. In Ratos' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
OM:RATO B CEO Compensation March 16th 2022

Ratos AB (publ)'s Growth

Over the past three years, Ratos AB (publ) has seen its earnings per share (EPS) grow by 88% per year. Its revenue is up 7.7% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Ratos AB (publ) Been A Good Investment?

Most shareholders would probably be pleased with Ratos AB (publ) for providing a total return of 156% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

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, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Ratos that investors should look into moving forward.

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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