This Is Why P/F BankNordik's (CPH:BNORDIK CSE) CEO Compensation Looks Appropriate

By
Simply Wall St
Published
March 19, 2021
CPSE:BNORDIK CSE
Source: Shutterstock

Despite strong share price growth of 58% for P/F BankNordik (CPH:BNORDIK CSE) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 26 March 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for P/F BankNordik

How Does Total Compensation For Arni Ellefsen Compare With Other Companies In The Industry?

At the time of writing, our data shows that P/F BankNordik has a market capitalization of kr.1.5b, and reported total annual CEO compensation of kr.3.4m for the year to December 2020. That's a fairly small increase of 4.4% over the previous year. We note that the salary portion, which stands at kr.2.32m constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between kr.625m and kr.2.5b, we discovered that the median CEO total compensation of that group was kr.4.1m. From this we gather that Arni Ellefsen is paid around the median for CEOs in the industry. What's more, Arni Ellefsen holds kr.1.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary kr.2.3m kr.2.2m 67%
Other kr.1.1m kr.1.1m 33%
Total Compensationkr.3.4m kr.3.3m100%

On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. P/F BankNordik pays a modest slice of remuneration through salary, as compared to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
CPSE:BNORDIK CSE CEO Compensation March 20th 2021

P/F BankNordik's Growth

Over the last three years, P/F BankNordik has shrunk its earnings per share by 18% per year. It saw its revenue drop 16% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has P/F BankNordik Been A Good Investment?

Boasting a total shareholder return of 58% over three years, P/F BankNordik 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.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for P/F BankNordik that you should be aware of before investing.

Important note: P/F BankNordik 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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.