This Is Why Spar Nord Bank A/S' (CPH:SPNO) CEO Compensation Looks Appropriate

Despite positive share price growth of 8.8% for Spar Nord Bank A/S (CPH:SPNO) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 07 April 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. 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. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Spar Nord Bank

Comparing Spar Nord Bank A/S' CEO Compensation With the industry

At the time of writing, our data shows that Spar Nord Bank A/S has a market capitalization of kr.8.5b, and reported total annual CEO compensation of kr.5.7m for the year to December 2020. That's a modest increase of 7.5% on the prior year. We note that the salary portion, which stands at kr.4.20m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from kr.6.3b to kr.20b, the reported median CEO total compensation was kr.4.9m. So it looks like Spar Nord Bank compensates Lasse Nyby in line with the median for the industry. Moreover, Lasse Nyby also holds kr.5.1m worth of Spar Nord Bank stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	kr.4.2m	kr.4.0m	74%
Other	kr.1.5m	kr.1.3m	26%
Total Compensation	kr.5.7m	kr.5.3m	100%

Talking in terms of the industry, salary represented approximately 83% of total compensation out of all the companies we analyzed, while other remuneration made up 17% of the pie. Spar Nord Bank sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Spar Nord Bank A/S' Growth Numbers

Over the last three years, Spar Nord Bank A/S has shrunk its earnings per share by 10% per year. In the last year, its revenue is down 9.0%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Spar Nord Bank A/S Been A Good Investment?

Spar Nord Bank A/S has not done too badly by shareholders, with a total return of 8.8%, over three years. It would be nice to see that metric improve in the future. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Spar Nord Bank that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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