Why AAK AB (publ.)'s (STO:AAK) CEO Pay Matters

Johan Westman became the CEO of AAK AB (publ.) (STO:AAK) in 2018, 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 assess whether AAK AB (publ.) pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for AAK AB (publ.)

How Does Total Compensation For Johan Westman Compare With Other Companies In The Industry?

Our data indicates that AAK AB (publ.) has a market capitalization of kr43b, and total annual CEO compensation was reported as kr19m for the year to December 2019. We note that's an increase of 37% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at kr8.4m.

For comparison, other companies in the same industry with market capitalizations ranging between kr34b and kr102b had a median total CEO compensation of kr14m. From this we gather that Johan Westman is paid around the median for CEOs in the industry.

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. In AAK AB (publ.)'s case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

AAK AB (publ.)'s Growth

AAK AB (publ.)'s earnings per share (EPS) grew 11% per year over the last three years. In the last year, its revenue changed by just 0.4%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has AAK AB (publ.) Been A Good Investment?

We think that the total shareholder return of 51%, over three years, would leave most AAK 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 previously discussed, Johan is compensated close to the median for companies of its size, and which belong to the same industry. Few would be critical of the leadership, since returns have been juicy and EPS are moving in the right direction. Indeed, many might consider that Johan is compensated rather modestly, given the solid company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.

Whatever your view on compensation, you might want to check if insiders are buying or selling AAK AB (publ.) shares (free trial).

Important note: AAK AB (publ.) 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. 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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