Yahoo Finance Does Hexagon AB (publ)'s (STO:HEXA B) CEO Pay Matter?
Ola Rollén became the CEO of Hexagon AB (publ) (STO:HEXA B) in 2000. First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Hexagon
How Does Ola Rollén's Compensation Compare With Similar Sized Companies?
According to our data, Hexagon AB (publ) has a market capitalization of kr173b, and paid its CEO total annual compensation worth €5.3m over the year to December 2019. That's a modest increase of 3.7% on the prior year year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €3.1m. We took a group of companies with market capitalizations over €7.4b, and calculated the median CEO total compensation to be €1.8m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Hexagon stands. On a sector level, around 60% of total compensation represents salary and 40% is other remuneration. Hexagon is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation
It would therefore appear that Hexagon AB (publ) pays Ola Rollén more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. The graphic below shows how CEO compensation at Hexagon has changed from year to year.
Is Hexagon AB (publ) Growing?
On average over the last three years, Hexagon AB (publ) has seen earnings per share (EPS) move in a favourable direction by 9.4% each year (using a line of best fit). It achieved revenue growth of 3.9% over the last year.
I'm not particularly impressed by the revenue growth, but I'm happy with the modest EPS growth. Considering these factors I'd say performance has been pretty decent, though not amazing. Shareholders might be interested in this free visualization of analyst forecasts.
Has Hexagon AB (publ) Been A Good Investment?
With a total shareholder return of 27% over three years, Hexagon 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...
We compared total CEO remuneration at Hexagon AB (publ) with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
We generally prefer to see stronger EPS growth, and we're not particularly impressed with the total shareholder return, over the last three years. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. Moving away from CEO compensation for the moment, we've identified 1 warning sign for Hexagon 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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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