What We Learned About P/F BankNordik's (CPH:BNORDIK CSE) CEO Pay

Árni Ellefsen became the CEO of P/F BankNordik (CPH:BNORDIK CSE) in 2015, 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 assess whether P/F BankNordik pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for P/F BankNordik

Comparing P/F BankNordik's CEO Compensation With the industry

At the time of writing, our data shows that P/F BankNordik has a market capitalization of kr.1.6b, and reported total annual CEO compensation of kr.3.4m for the year to December 2020. That's a modest increase of 4.4% on the prior year. In particular, the salary of kr.2.32m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between kr.615m and kr.2.5b had a median total CEO compensation of kr.4.1m. From this we gather that Árni Ellefsen is paid around the median for CEOs in the industry. Furthermore, Árni Ellefsen directly owns kr.1.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 88% of total compensation represents salary, while the remainder of 12% is other remuneration. In P/F BankNordik's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

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 49% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. 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?

Most shareholders would probably be pleased with P/F BankNordik for providing a total return of 66% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

As previously discussed, Árni is compensated close to the median for companies of its size, and which belong to the same industry. Some investors may take issue with this, especially considering shrinking EPS for the past three years. On the flip side, shareholder returns have been strong over the same time, which is certainly a positive sign. We're not saying CEO compensation is too generous, but shareholders might think performance needs to be improved before paying any more.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at P/F BankNordik.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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