What We Learned About Prevas' (STO:PREV B) CEO Pay

Johan Strid has been the CEO of Prevas AB (STO:PREV B) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Prevas.

View our latest analysis for Prevas

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

Our data indicates that Prevas AB has a market capitalization of kr556m, and total annual CEO compensation was reported as kr3.7m for the year to December 2019. That's a notable increase of 38% on last year. We note that the salary portion, which stands at kr2.45m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below kr1.7b, reported a median total CEO compensation of kr1.7m. Accordingly, our analysis reveals that Prevas AB pays Johan Strid north of the industry median. What's more, Johan Strid holds kr8.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. There isn't a significant difference between Prevas and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Prevas AB's Growth

Over the past three years, Prevas AB has seen its earnings per share (EPS) grow by 162% per year. In the last year, its revenue is down 1.4%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Prevas AB Been A Good Investment?

Boasting a total shareholder return of 264% over three years, Prevas AB has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As we touched on above, Prevas AB is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Importantly though, EPS growth and shareholder returns are very impressive over the last three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. Given the strong history of shareholder returns, the shareholders are probably very happy with Johan's performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Prevas that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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