Jan Kjerpeseth became the CEO of Sparebanken Vest (OB:SVEG) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Sparebanken Vest pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Sparebanken Vest's CEO Compensation With the industry
Our data indicates that Sparebanken Vest has a market capitalization of kr6.7b, and total annual CEO compensation was reported as kr6.9m for the year to December 2019. That's a fairly small increase of 4.9% over the previous year. Notably, the salary which is kr4.28m, represents most of the total compensation being paid.
On comparing similar companies from the same industry with market caps ranging from kr3.7b to kr15b, we found that the median CEO total compensation was kr4.8m. Hence, we can conclude that Jan Kjerpeseth is remunerated higher than the industry median. Moreover, Jan Kjerpeseth also holds kr9.5m worth of Sparebanken Vest stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 81% of total compensation represents salary and 19% is other remuneration. Sparebanken Vest sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Sparebanken Vest's Growth
Sparebanken Vest has seen its earnings per share (EPS) increase by 1.8% a year over the past three years. In the last year, its revenue is down 5.1%.
We would prefer it if there was revenue growth, but the modest EPSgrowth gives us some relief. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Vest Been A Good Investment?
Sparebanken Vest has served shareholders reasonably well, with a total return of 29% over three years. 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.
As previously discussed, Jan is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, EPS growth is not moving in the right direction, and the returns to shareholders could have been better, over the last three years. Overall, although the company has delivered steady performance, we would like to see an improvement in key metrics before we can say the high CEO compensation is justified.
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. In our study, we found 2 warning signs for Sparebanken Vest you should be aware of, and 1 of them is concerning.
Important note: Sparebanken Vest 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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