Here's What We Think About UPM-Kymmene Oyj's (HEL:UPM) CEO Pay
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Jussi Pesonen has been the CEO of UPM-Kymmene Oyj (HEL:UPM) since 2004. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for UPM-Kymmene Oyj
How Does Jussi Pesonen's Compensation Compare With Similar Sized Companies?
Our data indicates that UPM-Kymmene Oyj is worth €12b, and total annual CEO compensation is €6.0m. (This figure is for the year to December 2018). That's a notable increase of 13% on last year. We think total compensation is more important but we note that the CEO salary is lower, at €1.1m. When we examined a group of companies with market caps over €7.0b, we found that their median CEO total compensation was €1.5m. (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).
As you can see, Jussi Pesonen is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean UPM-Kymmene Oyj is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at UPM-Kymmene Oyj has changed over time.
Is UPM-Kymmene Oyj Growing?
Over the last three years UPM-Kymmene Oyj has grown its earnings per share (EPS) by an average of 16% per year (using a line of best fit). It achieved revenue growth of 6.2% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested in this free visualization of analyst forecasts.
Has UPM-Kymmene Oyj Been A Good Investment?
Most shareholders would probably be pleased with UPM-Kymmene Oyj for providing a total return of 54% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
We compared total CEO remuneration at UPM-Kymmene Oyj with the amount paid at other large companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. So you may want to check if insiders are buying UPM-Kymmene Oyj shares with their own money (free access).
Important note: UPM-Kymmene Oyj 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.
