Instabank ASA's (OB:INSTA) CEO Will Probably Find It Hard To See A Huge Raise This Year

In the past three years, shareholders of Instabank ASA (OB:INSTA) have seen a loss on their investment. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 08 April 2021. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Instabank

Comparing Instabank ASA's CEO Compensation With the industry

Our data indicates that Instabank ASA has a market capitalization of kr649m, and total annual CEO compensation was reported as kr2.7m for the year to December 2020. That's a notable increase of 9.1% on last year. We note that the salary portion, which stands at kr2.42m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below kr1.7b, we found that the median total CEO compensation was kr2.8m. This suggests that Instabank remunerates its CEO largely in line with the industry average. What's more, Robert Berg holds kr11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	kr2.4m	kr2.0m	90%
Other	kr280k	kr453k	10%
Total Compensation	kr2.7m	kr2.5m	100%

Speaking on an industry level, nearly 82% of total compensation represents salary, while the remainder of 18% is other remuneration. Instabank 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.

Instabank ASA's Growth

Instabank ASA's earnings per share (EPS) grew 134% per year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Instabank ASA Been A Good Investment?

With a three year total loss of 7.1% for the shareholders, Instabank ASA would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for Instabank (1 is concerning!) that you should be aware of before investing here.

Switching gears from Instabank, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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