Does Sparebanken Øst's (OB:SPOG) CEO Salary Reflect Performance?

Simply Wall St

Fri, Jun 7, 2019, 4:27 AM

In 2011 Pål Strand was appointed CEO of Sparebanken Øst (OB:SPOG). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. 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.

See our latest analysis for Sparebanken Øst

How Does Pål Strand's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Sparebanken Øst has a market cap of øre1.1b, and is paying total annual CEO compensation of øre3.0m. (This is based on the year to December 2018). That's a fairly small increase of 5.4% on year before. We think total compensation is more important but we note that the CEO salary is lower, at øre2.5m. We looked at a group of companies with market capitalizations under øre1.7b, and the median CEO total compensation was øre2.6m.

So Pål Strand 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 Sparebanken Øst has changed from year to year.

Is Sparebanken Øst Growing?

Sparebanken Øst has increased its earnings per share (EPS) by an average of 5.6% a year, over the last three years (using a line of best fit). It achieved revenue growth of 1.7% over the last year.

I would argue that the improvement in revenue isn't particularly impressive, but it is good to see modest EPS growth. Considering these factors I'd say performance has been pretty decent, though not amazing. It could be important to check this free visual depiction of what analysts expect for the future.

Has Sparebanken Øst Been A Good Investment?

Boasting a total shareholder return of 49% over three years, Sparebanken Øst has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Pål Strand is paid around the same as most CEOs of similar size companies.

While we would like to see improved growth metrics, there is no doubt that the total returns have been great, over the last three years. So all things considered I'd venture that the CEO pay is appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Sparebanken Øst shares (free trial).