Why Pareto Bank's (OB:PARB) CEO Pay Matters

Tiril Villum has been the CEO of Pareto Bank ASA (OB:PARB) since 2011, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Pareto Bank

How Does Total Compensation For Tiril Villum Compare With Other Companies In The Industry?

Our data indicates that Pareto Bank ASA has a market capitalization of kr3.0b, and total annual CEO compensation was reported as kr4.2m for the year to December 2020. That's just a smallish increase of 4.0% on last year. Notably, the salary which is kr2.83m, represents most of the total compensation being paid.

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 kr3.8m. So it looks like Pareto Bank compensates Tiril Villum in line with the median for the industry. Moreover, Tiril Villum also holds kr13m worth of Pareto Bank stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 81% of total compensation represents salary, while the remainder of 19% is other remuneration. Pareto Bank pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Pareto Bank ASA's Growth

Pareto Bank ASA's earnings per share (EPS) grew 4.3% per year over the last three years. In the last year, its revenue is up 7.2%.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but we're happy with the modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Pareto Bank ASA Been A Good Investment?

Pareto Bank ASA has generated a total shareholder return of 21% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As we noted earlier, Pareto Bank pays its CEO in line with similar-sized companies belonging to the same industry. However, EPS and total shareholder return are solid yet uninspiring. Considering the steady performance, it's tough to call out CEO compensation as too high, but shareholders might want to see more robust growth metrics before agreeing to a future raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Pareto Bank that investors should think about before committing capital to this stock.

Switching gears from Pareto Bank, 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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