Ragnar Torland has been the CEO of Melhus Sparebank (OB:MELG) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Melhus Sparebank pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Melhus Sparebank
How Does Total Compensation For Ragnar Torland Compare With Other Companies In The Industry?
According to our data, Melhus Sparebank has a market capitalization of kr411m, and paid its CEO total annual compensation worth kr2.7m over the year to December 2020. That's just a smallish increase of 5.6% on last year. We note that the salary portion, which stands at kr1.73m 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 kr3.8m. This suggests that Melhus Sparebank remunerates its CEO largely in line with the industry average.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | kr1.7m | kr1.7m | 64% |
| Other | kr962k | kr863k | 36% |
| Total Compensation | kr2.7m | kr2.5m | 100% |
Speaking on an industry level, nearly 53% of total compensation represents salary, while the remainder of 47% is other remuneration. Melhus Sparebank pays out 64% of remuneration in the form of a salary, significantly higher than the industry average. 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.
Melhus Sparebank's Growth
Over the last three years, Melhus Sparebank has shrunk its earnings per share by 3.3% per year. In the last year, its revenue is down 6.8%.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Melhus Sparebank Been A Good Investment?
Boasting a total shareholder return of 48% over three years, Melhus Sparebank 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...
As previously discussed, Ragnar is compensated close to the median for companies of its size, and which belong to the same industry. This isn't great when you look at it against the backdrop of EPS growth, which has been negative 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 wouldn't say CEO compensation is too high, but shareholders might think performance needs to be improved before paying any more.
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 2 warning signs for Melhus Sparebank that investors should be aware of in a dynamic business environment.
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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About OB:MELG
Melhus Sparebank
A savings bank, provides various banking products and services to companies, agriculture customers, and private individuals in Norway.
Adequate balance sheet and fair value.
