How Much Is Hanza Holding AB (publ) (STO:HANZA) Paying Its CEO?

This article will reflect on the compensation paid to Erik Stenfors who has served as CEO of Hanza Holding AB (publ) (STO:HANZA) since 2008. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Hanza Holding

How Does Total Compensation For Erik Stenfors Compare With Other Companies In The Industry?

At the time of writing, our data shows that Hanza Holding AB (publ) has a market capitalization of kr472m, and reported total annual CEO compensation of kr2.8m for the year to December 2019. We note that's an increase of 8.7% above last year. Notably, the salary which is kr2.21m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under kr1.7b, the reported median total CEO compensation was kr3.4m. So it looks like Hanza Holding compensates Erik Stenfors in line with the median for the industry. Furthermore, Erik Stenfors directly owns kr6.3m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. According to our research, Hanza Holding has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Hanza Holding AB (publ)'s Growth

Hanza Holding AB (publ) has reduced its earnings per share by 41% a year over the last three years. It achieved revenue growth of 13% over the last year.

The decline in EPS is a bit concerning. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Hanza Holding AB (publ) Been A Good Investment?

With a total shareholder return of 22% over three years, Hanza Holding AB (publ) shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

As we touched on above, Hanza Holding AB (publ) is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. According to our analysis, Hanza Holding is suffering from uninspiring EPS growth, and even though shareholder returns are stable, they are hardly impressive. This doesn't compare well with CEO compensation, which is close to the industry median. We wouldn't go as far as saying CEO compensation is inappropriate, but we don't think the executive is underpaid.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in Hanza Holding we think you should know about.

Important note: Hanza Holding 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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