In 2011 Pål Strand was appointed CEO of Sparebanken Øst (OB:SPOG). First, this article will compare CEO compensation with compensation at similar sized 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. This method should give us information to assess how appropriately the company pays the CEO.
How Does Pål Strand’s Compensation Compare With Similar Sized Companies?
According to our data, Sparebanken Øst has a market capitalization of kr1.1b, and pays its CEO total annual compensation worth kr3.0m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at kr2.5m. We looked at a group of companies with market capitalizations under kr1.8b, and the median CEO total compensation was kr3.0m.
So Pål Strand is paid around the average of 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.
You can see a visual representation of the CEO compensation at Sparebanken Øst, below.
Is Sparebanken Øst Growing?
Sparebanken Øst saw earnings per share stay pretty flat over the last three years, albeit with a slight positive trend. The trailing twelve months of revenue was pretty much the same as the prior period.
I generally like to see a little revenue growth, but it is good to see modest EPS growth. In conclusion we can’t form a strong opinion about business performance yet; but it’s one worth watching.
Has Sparebanken Øst Been A Good Investment?
Boasting a total shareholder return of 52% over three years, Sparebanken Øst has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
Pål Strand is paid around the same as most CEOs of similar size companies.
While the growth could be better, the shareholder returns are clearly good. So considering most shareholders would be happy, we’d say 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).
Important note: Sparebanken Øst may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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