Magnus Johansson is the CEO of Transtema Group AB (STO:TRANS), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Transtema Group AB's CEO Compensation With the industry
Our data indicates that Transtema Group AB has a market capitalization of kr412m, and total annual CEO compensation was reported as kr1.2m for the year to December 2019. That's a fairly small increase of 3.9% over the previous year. In particular, the salary of kr832.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below kr1.7b, we found that the median total CEO compensation was kr2.5m. In other words, Transtema Group pays its CEO lower than the industry median. Furthermore, Magnus Johansson directly owns kr97m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the broader industry, salary and other compensation roughly make up 50% each, of the total compensation. Transtema Group pays out 70% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Transtema Group AB's Growth Numbers
Over the last three years, Transtema Group AB has shrunk its earnings per share by 11% per year. In the last year, its revenue changed by just 0.2%.
Overall this is not a very positive result for shareholders. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Transtema Group AB Been A Good Investment?
Since shareholders would have lost about 73% over three years, some Transtema Group AB investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we noted earlier, Transtema Group pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Over the last three years, shareholder returns have been downright disappointing, and EPSgrowth has been equally disappointing. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Transtema Group that you should be aware of before investing.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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