We Think The Compensation For Svenska Cellulosa Aktiebolaget SCA (publ)'s (STO:SCA B) CEO Looks About Right

Key Insights

• Svenska Cellulosa Aktiebolaget will host its Annual General Meeting on 30th of March
• Salary of kr10.5m is part of CEO Ulf Larsson's total remuneration
• The overall pay is 34% below the industry average
• Over the past three years, Svenska Cellulosa Aktiebolaget's EPS fell by 24% and over the past three years, the total shareholder return was 44%

Performance at Svenska Cellulosa Aktiebolaget SCA (publ) (STO:SCA B) has been rather uninspiring recently and shareholders may be wondering how CEO Ulf Larsson plans to fix this. At the next AGM coming up on 30th of March, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Svenska Cellulosa Aktiebolaget

Comparing Svenska Cellulosa Aktiebolaget SCA (publ)'s CEO Compensation With The Industry

At the time of writing, our data shows that Svenska Cellulosa Aktiebolaget SCA (publ) has a market capitalization of kr95b, and reported total annual CEO compensation of kr26m for the year to December 2022. That's a notable increase of 11% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at kr11m.

In comparison with other companies in the Swedish Forestry industry with market capitalizations ranging from kr41b to kr124b, the reported median CEO total compensation was kr39m. That is to say, Ulf Larsson is paid under the industry median. Moreover, Ulf Larsson also holds kr17m worth of Svenska Cellulosa Aktiebolaget stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	kr11m	kr9.6m	41%
Other	kr15m	kr13m	59%
Total Compensation	kr26m	kr23m	100%

On an industry level, around 58% of total compensation represents salary and 42% is other remuneration. Svenska Cellulosa Aktiebolaget pays a modest slice of remuneration through salary, as compared 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.

A Look at Svenska Cellulosa Aktiebolaget SCA (publ)'s Growth Numbers

Over the last three years, Svenska Cellulosa Aktiebolaget SCA (publ) has shrunk its earnings per share by 24% per year. Its revenue is up 12% over the last year.

Overall this is not a very positive result for shareholders. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Svenska Cellulosa Aktiebolaget SCA (publ) Been A Good Investment?

We think that the total shareholder return of 44%, over three years, would leave most Svenska Cellulosa Aktiebolaget SCA (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...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Svenska Cellulosa Aktiebolaget (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Svenska Cellulosa Aktiebolaget 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.