Should You Worry About HEXPOL AB (publ)'s (STO:HPOL B) CEO Pay Cheque?

In 2017 Mikael Fryklund was appointed CEO of HEXPOL AB (publ) (STO:HPOL B). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. 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.

Check out our latest analysis for HEXPOL

How Does Mikael Fryklund's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that HEXPOL AB (publ) has a market cap of kr31b, and reported total annual CEO compensation of kr19m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at kr8.1m. We examined companies with market caps from kr19b to kr61b, and discovered that the median CEO total compensation of that group was kr9.6m.

It would therefore appear that HEXPOL AB (publ) pays Mikael Fryklund more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at HEXPOL has changed from year to year.

Is HEXPOL AB (publ) Growing?

HEXPOL AB (publ) has increased its earnings per share (EPS) by an average of 7.2% a year, over the last three years (using a line of best fit). It achieved revenue growth of 16% over the last year.

I would argue that the modest growth in revenue is a notable positive. And the improvement in earnings per share is modest but respectable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. Shareholders might be interested in this free visualization of analyst forecasts.

Has HEXPOL AB (publ) Been A Good Investment?

HEXPOL AB (publ) has generated a total shareholder return of 18% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

We examined the amount HEXPOL AB (publ) pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

One might like to have seen stronger growth, and the shareholder returns have failed to inspire, over the last three years. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. So you may want to check if insiders are buying HEXPOL shares with their own money (free access).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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