Karl-Johan Persson has been the CEO of H & M Hennes & Mauritz AB (publ) (STO:HM B) since 2009. First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Karl-Johan Persson's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that H & M Hennes & Mauritz AB (publ) has a market cap of kr315b, and reported total annual CEO compensation of kr14m for the year to November 2018. Notably, the salary of kr14m is the vast majority of the CEO compensation. We took a group of companies with market capitalizations over kr75b, and calculated the median CEO total compensation to be kr19m. (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).
So Karl-Johan Persson is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
You can see, below, how CEO compensation at H & M Hennes & Mauritz has changed over time.
Is H & M Hennes & Mauritz AB (publ) Growing?
Over the last three years H & M Hennes & Mauritz AB (publ) has shrunk its earnings per share by an average of 18% per year (measured with a line of best fit). Its revenue is up 11% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has H & M Hennes & Mauritz AB (publ) Been A Good Investment?
Given the total loss of 11% over three years, many shareholders in H & M Hennes & Mauritz AB (publ) are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
Karl-Johan Persson is paid around what is normal the leaders of larger companies.
The company isn't growing EPS, and shareholder returns have been disappointing. Suffice it to say, we don't think the CEO is underpaid! So you may want to check if insiders are buying H & M Hennes & Mauritz shares with their own money (free access).
If you want to buy a stock that is better than H & M Hennes & Mauritz, this free list of high return, low debt companies is a great place to look.
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