Henrik Ehrnrooth became the CEO of KONE Oyj (HEL:KNEBV) in 2014. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for KONE Oyj

How Does Henrik Ehrnrooth’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that KONE Oyj has a market cap of €22b, and is paying total annual CEO compensation of €4.9m. (This figure is for the year to 2015). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at €750k. We looked at a group of companies with market capitalizations over €7.0b and the median CEO compensation was €4.1m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

So Henrik Ehrnrooth receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

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

Is KONE Oyj Growing?

Over the last three years KONE Oyj has shrunk its earnings per share by an average of 4.1% per year. In the last year, its revenue changed by just -0.04%.

Sadly for shareholders, earnings per share are actually down, over three years. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

You might want to check this free visual report on analyst forecasts for future earnings.

Has KONE Oyj Been A Good Investment?

KONE Oyj has served shareholders reasonably well, with a total return of 30% over three years. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

Henrik Ehrnrooth is paid around what is normal the leaders of larger companies.

We’re not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We do not think the CEO pay is a problem, but it’s probably fair to say that many shareholders would like to see improved performance, before any pay rise occurs. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling KONE Oyj (free visualization of insider trades).

Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.