How Does Grong Sparebank's (OB:GRONG-ME) CEO Pay Compare With Company Performance?

Jon Solum has been the CEO of Grong Sparebank (OB:GRONG-ME) since 2000, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Grong Sparebank pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Grong Sparebank

How Does Total Compensation For Jon Solum Compare With Other Companies In The Industry?

At the time of writing, our data shows that Grong Sparebank has a market capitalization of kr345m, and reported total annual CEO compensation of kr2.0m for the year to December 2019. That's just a smallish increase of 3.6% on last year. In particular, the salary of kr1.65m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below kr1.8b, we found that the median total CEO compensation was kr2.7m. This suggests that Grong Sparebank remunerates its CEO largely in line with the industry average. Moreover, Jon Solum also holds kr4.3m worth of Grong Sparebank stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 81% of total compensation represents salary and 19% is other remuneration. Grong Sparebank is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

A Look at Grong Sparebank's Growth Numbers

Grong Sparebank saw earnings per share stay pretty flat over the last three years. It achieved revenue growth of 7.2% over the last year.

We'd prefer higher revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Grong Sparebank Been A Good Investment?

Grong Sparebank has served shareholders reasonably well, with a total return of 31% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

As previously discussed, Jon 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 EPS or total shareholder return. So, although the CEO compensation seems reasonable, shareholders might want to see some further progress before they agree that Jon should get a raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 1 which is concerning) in Grong Sparebank we think you should know about.

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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