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Is Hexagon AB (publ)'s (STO:HEXA B) CEO Pay Fair?

Simply Wall St

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Ola Rollén has been the CEO of Hexagon AB (publ) (STO:HEXA B) since 2016. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See 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 kr174b, and pays its CEO total annual compensation worth €5.1m. (This is based on the year to December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at €3.0m. When we examined a group of companies with market caps over €7.1b, we found that their median CEO total compensation was €2.0m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

Thus we can conclude that Ola Rollén receives more in total compensation than the median of a group of large companies in the same market as Hexagon AB (publ). However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Hexagon, below.

OM:HEXA B CEO Compensation, July 17th 2019

Is Hexagon AB (publ) Growing?

On average over the last three years, Hexagon AB (publ) has grown earnings per share (EPS) by 13% each year (using a line of best fit). In the last year, its revenue is up 9.7%.

This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.

Has Hexagon AB (publ) Been A Good Investment?

I think that the total shareholder return of 52%, over three years, would leave most Hexagon AB (publ) shareholders smiling. 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 the total CEO remuneration paid by Hexagon AB (publ), and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. So you may want to check if insiders are buying Hexagon shares with their own money (free access).

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.

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.