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Should You Worry About Sandvik AB's (STO:SAND) CEO Pay?

Simply Wall St

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Björn Klas Rosengren has been the CEO of Sandvik AB (STO:SAND) since 2015. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Sandvik

How Does Björn Klas Rosengren's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Sandvik AB has a market cap of kr199b, and is paying total annual CEO compensation of kr39m. (This number is for the twelve months until December 2018). We think total compensation is more important but we note that the CEO salary is lower, at kr15m. We looked at a group of companies with market capitalizations over kr75b and the median CEO total compensation was kr21m. (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).

Thus we can conclude that Björn Klas Rosengren receives more in total compensation than the median of a group of large companies in the same market as Sandvik AB. 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 Sandvik, below.

OM:SAND CEO Compensation, July 17th 2019

Is Sandvik AB Growing?

Over the last three years Sandvik AB has grown its earnings per share (EPS) by an average of 42% per year (using a line of best fit). It achieved revenue growth of 9.3% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. 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 Sandvik AB Been A Good Investment?

Most shareholders would probably be pleased with Sandvik AB for providing a total return of 87% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

We compared the total CEO remuneration paid by Sandvik AB, 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.

However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. Shareholders may want to check for free if Sandvik insiders are buying or selling shares.

Important note: Sandvik 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.