It Looks Like The CEO Of VOW ASA (OB:VOW) May Be Underpaid Compared To Peers

Shareholders will be pleased by the impressive results for VOW ASA (OB:VOW) recently and CEO Henrik Badin has played a key role. At the upcoming AGM on 14 May 2021, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

Check out our latest analysis for VOW

How Does Total Compensation For Henrik Badin Compare With Other Companies In The Industry?

According to our data, VOW ASA has a market capitalization of kr4.3b, and paid its CEO total annual compensation worth kr3.2m over the year to December 2020. Notably, that's an increase of 18% over the year before. We note that the salary portion, which stands at kr2.66m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from kr1.6b to kr6.6b, we found that the median CEO total compensation was kr5.0m. In other words, VOW pays its CEO lower than the industry median. Moreover, Henrik Badin also holds kr369m worth of VOW 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	kr2.7m	kr2.3m	82%
Other	kr586k	kr458k	18%
Total Compensation	kr3.2m	kr2.7m	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. Although there is a difference in how total compensation is set, VOW more or less reflects the market in terms of setting the salary. 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 VOW ASA's Growth Numbers

Over the past three years, VOW ASA has seen its earnings per share (EPS) grow by 25% per year. It achieved revenue growth of 21% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 VOW ASA Been A Good Investment?

We think that the total shareholder return of 850%, over three years, would leave most VOW ASA shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. Seeing that earnings growth and share price performance seems to be on the right path, the more pressing focus for shareholders at the AGM may be how the board and management plans to turn the company into a sustainably profitable one.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 5 warning signs for VOW (of which 2 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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