Here’s why shareholders might consider paying the CEO of Swedish orphan Biovitrum AB (publ) (STO:SOBI) a little more

Key ideas

• The annual general meeting of Swedish Orphan Biovitrum will take place on May 14
• CEO Guido Oelkers’ total salary includes salary of 12.3 million kr
• Total compensation is 43% below the industry average
• Over the last three years, Swedish Orphan Biovitrum’s EPS fell 12% and over the last three years the total shareholder return was 108%.

Shareholders will probably not be disappointed by the good results of Swedish orphan Biovitrum AB (publ) (STO:SOBI) recently and they will keep this in mind at the AGM on May 14th. It would also be an opportunity for them to hear the board review financial results, discuss the company’s future strategy to further improve the business, and vote on resolutions such as executive compensation. Here’s our take on why we think CEO compensation is fair and may even warrant a raise.

Check out our latest analysis for Swedish Orphan Biovitrum

Swedish Orphan Biovitrum AB (publ) CEO compensation compared to industry

Our data indicates that Swedish Orphan Biovitrum AB (publ) has a market capitalization of 95 billion crowns and total annual CEO compensation was 49 million crowns for the year ending December 2023. This is only slight increase of 3.4% compared to last year. Although we always look at total compensation first, our analysis shows that the salary component is smaller, at 12 million crowns.

Comparing similar companies in the Swedish biotech sector with market capitalizations ranging from 43 billion kr to 130 billion kr, we found that the median CEO total compensation was 86 million kr. In other words, Swedish Orphan Biovitrum pays its CEO less than the industry median. Additionally, Guido Oelkers also holds Swedish Orphan Biovitrum shares worth 105 million crowns directly under his own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	12 million kr	11 million kr	25%
Other	37 million kr	36 million kr	75%
Total compensation	49 million kr	47 million kr	100%

At the industry level, approximately 56% of total compensation represents salary and 44% is other compensation. Interestingly, Swedish Orphan Biovitrum allocates a lower share of compensation to salary compared to the overall industry. If total compensation is skewed toward non-salary benefits, this indicates that CEO compensation is tied to company performance.

A look at the growth figures of Swedish Orphan Biovitrum AB (publ)

Over the past three years, Swedish company Orphan Biovitrum AB (publ) has reduced its earnings per share by 12% per year. Its turnover is up 21% compared to last year.

The reduction in EPS, over three years, is undoubtedly worrying. On the other hand, strong revenue growth suggests the business is growing. It is difficult to draw a conclusion about business performance at this time. This might be something to watch out for. Historical performance can sometimes be a good indicator of what’s next, but if you want to get a glimpse into the company’s future, this might be of interest to you. free visualization of analyst forecasts.

Was Swedish Orphan Biovitrum AB (publ) a good investment?

Most shareholders would probably be happy that Swedish Orphan Biovitrum AB (publ) has delivered a total return of 108% over three years. As a result, some might think the CEO should be paid more than is normal for companies of similar size.

In summary…

The company’s overall performance, while not bad, could be better. Assuming the company continues to grow at a healthy rate, few shareholders would object to CEO compensation. In fact, strategic decisions that could impact the company’s future could be a much more interesting topic for investors, as it would help them define their long-term expectations.

While it’s important to pay attention to CEO compensation, investors should also consider other elements of the company. We did our research and spotted 3 warning signs for Swedish Orphan Biovitrum that investors should consider moving forward.

Arguably, company quality is far more important than CEO pay levels. So watch this free list of interesting companies that have HIGH return on equity and low debt.

Any feedback on this article? Worried about the content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to constitute financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your objectives or your financial situation. Our goal is to provide you with targeted, long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.