Here's Why We Think Sparebanken Møre's (OB:MORG) CEO Compensation Looks Fair for the time being

Sparebanken Møre (OB:MORG) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 23 March 2021. 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 the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Sparebanken Møre

Comparing Sparebanken Møre's CEO Compensation With the industry

At the time of writing, our data shows that Sparebanken Møre has a market capitalization of kr3.2b, and reported total annual CEO compensation of kr3.3m for the year to December 2020. That's just a smallish increase of 4.4% on last year. In particular, the salary of kr2.99m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between kr1.7b and kr6.8b, we discovered that the median CEO total compensation of that group was kr3.6m. So it looks like Sparebanken Møre compensates Trond Nydal in line with the median for the industry. Moreover, Trond Nydal also holds kr2.5m worth of Sparebanken Møre 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	kr3.0m	kr2.9m	91%
Other	kr278k	kr245k	9%
Total Compensation	kr3.3m	kr3.1m	100%

Talking in terms of the industry, salary represented approximately 82% of total compensation out of all the companies we analyzed, while other remuneration made up 18% of the pie. Sparebanken Møre is paying a higher share of its remuneration through a 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 Sparebanken Møre's Growth Numbers

Earnings per share at Sparebanken Møre are much the same as they were three years ago, albeit slightly lower. Its revenue is down 12% over the previous year.

A lack of EPS improvement is not good to see. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Sparebanken Møre Been A Good Investment?

Boasting a total shareholder return of 35% over three years, Sparebanken Møre 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...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

Shareholders may want to check for free if Sparebanken Møre insiders are buying or selling shares.

Switching gears from Sparebanken Møre, 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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