Increases to CEO Compensation Might Be Put On Hold For Now at SpareBank 1 BV (OB:SBVG)

Despite strong share price growth of 62% for SpareBank 1 BV (OB:SBVG) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 09 April 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for SpareBank 1 BV

How Does Total Compensation For Rune Fjeldstad Compare With Other Companies In The Industry?

Our data indicates that SpareBank 1 BV has a market capitalization of kr3.0b, and total annual CEO compensation was reported as kr9.2m for the year to December 2020. That's a notable increase of 32% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at kr3.0m.

On comparing similar companies from the same industry with market caps ranging from kr1.7b to kr6.8b, we found that the median CEO total compensation was kr3.6m. This suggests that Rune Fjeldstad is paid more than the median for the industry. Furthermore, Rune Fjeldstad directly owns kr4.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	kr3.0m	kr2.9m	33%
Other	kr6.2m	kr4.1m	67%
Total Compensation	kr9.2m	kr7.0m	100%

On an industry level, around 82% of total compensation represents salary and 18% is other remuneration. SpareBank 1 BV pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at SpareBank 1 BV's Growth Numbers

Over the last three years, SpareBank 1 BV has shrunk its earnings per share by 2.6% per year. Its revenue is down 1.9% over the previous year.

Its a bit disappointing to see that the company has failed to grow its EPS. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has SpareBank 1 BV Been A Good Investment?

Most shareholders would probably be pleased with SpareBank 1 BV for providing a total return of 62% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. 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.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for SpareBank 1 BV that investors should be aware of in a dynamic business environment.

Important note: SpareBank 1 BV is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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