Should Shareholders Reconsider Elekta AB (publ)'s (STO:EKTA B) CEO Compensation Package?

Key Insights

• Elekta's Annual General Meeting to take place on 5th of September
• Total pay for CEO Gustaf Salford includes kr7.34m salary
• Total compensation is similar to the industry average
• Elekta's three-year loss to shareholders was 31% while its EPS was down 0.9% over the past three years

Elekta AB (publ) (STO:EKTA B) has not performed well recently and CEO Gustaf Salford will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 5th of September. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Elekta

How Does Total Compensation For Gustaf Salford Compare With Other Companies In The Industry?

According to our data, Elekta AB (publ) has a market capitalization of kr26b, and paid its CEO total annual compensation worth kr17m over the year to April 2024. We note that's a small decrease of 4.8% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at kr7.3m.

For comparison, other companies in the Swedish Medical Equipment industry with market capitalizations ranging between kr20b and kr65b had a median total CEO compensation of kr24m. From this we gather that Gustaf Salford is paid around the median for CEOs in the industry. What's more, Gustaf Salford holds kr4.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	kr7.3m	kr7.4m	42%
Other	kr10m	kr11m	58%
Total Compensation	kr17m	kr18m	100%

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. Elekta sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Elekta AB (publ)'s Growth Numbers

Elekta AB (publ) saw earnings per share stay pretty flat over the last three years. In the last year, its revenue is up 4.3%.

A lack of EPS improvement is not good to see. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Elekta AB (publ) Been A Good Investment?

The return of -31% over three years would not have pleased Elekta AB (publ) shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Elekta that investors should think about before committing capital to this stock.

Switching gears from Elekta, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.