Richard Heiberg became the CEO of SpareBank 1 Østlandet (OB:SPOL) in 2010, and we think it’s a good time to look at the executive’s compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for SpareBank 1 Østlandet
Comparing SpareBank 1 Østlandet’s CEO Compensation With the industry
Our data indicates that SpareBank 1 Østlandet has a market capitalization of kr10b, and total annual CEO compensation was reported as kr5.1m for the year to December 2019. That’s a modest increase of 3.4% on the prior year. Notably, the salary which is kr4.39m, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations ranging from kr3.6b to kr15b, the reported median CEO total compensation was kr4.8m. From this we gather that Richard Heiberg is paid around the median for CEOs in the industry. What’s more, Richard Heiberg holds kr9.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | kr4.4m | kr4.2m | 87% |
| Other | kr661k | kr674k | 13% |
| Total Compensation | kr5.1m | kr4.9m | 100% |
On an industry level, roughly 81% of total compensation represents salary and 19% is other remuneration. Our data reveals that SpareBank 1 Østlandet allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion – which is generally tied to performance, is lower.
A Look at SpareBank 1 Østlandet’s Growth Numbers
SpareBank 1 Østlandet’s earnings per share (EPS) grew 7.0% per year over the last three years. In the last year, its revenue is down 9.3%.
We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..
Has SpareBank 1 Østlandet Been A Good Investment?
SpareBank 1 Østlandet has served shareholders reasonably well, with a total return of 23% 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.
To Conclude…
As previously discussed, Richard is compensated close to the median for companies of its size, and which belong to the same industry. But the company has failed to produce substantial growth in either earnings or total shareholder return. So, although the CEO compensation seems reasonable, shareholders might want to see some further progress before they agree that Richard should get a raise.
CEO compensation can have a massive impact on performance, but it’s just one element. That’s why we did some digging and identified 1 warning sign for SpareBank 1 Østlandet that you should be aware of before investing.
Important note: SpareBank 1 Østlandet is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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