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Thomas Eldered became the CEO of Recipharm AB (publ) (STO:RECI B) in 2008. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Thomas Eldered's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Recipharm AB (publ) has a market cap of kr8.3b, and is paying total annual CEO compensation of kr3.5m. (This number is for the twelve months until December 2018). That's less than last year. It is worth noting that the CEO compensation consists almost entirely of the salary, worth kr3.4m. We looked at a group of companies with market capitalizations from kr3.8b to kr15b, and the median CEO total compensation was kr5.5m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.
You can see, below, how CEO compensation at Recipharm has changed over time.
Is Recipharm AB (publ) Growing?
On average over the last three years, Recipharm AB (publ) has shrunk earnings per share by 36% each year (measured with a line of best fit). In the last year, its revenue is up 20%.
Sadly for shareholders, earnings per share are actually down, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Recipharm AB (publ) Been A Good Investment?
With a total shareholder return of 7.7% over three years, Recipharm AB (publ) has done okay by shareholders. But they would probably prefer not to see CEO compensation far in excess of the median.
It looks like Recipharm AB (publ) pays its CEO less than similar sized companies.
Thomas Eldered is remunerated more modestly than is a normal at similar sized companies. But the business isn't growing earnings per share, and the returns to shareholders haven't been wonderful. There is room for improved company performance, but we don't see the CEO pay as a big issue here. Shareholders may want to check for free if Recipharm insiders are buying or selling shares.
Important note: Recipharm may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.