What Can We Learn About Zalaris' (OB:ZAL) CEO Compensation?

Hans-Petter Mellerud is the CEO of Zalaris ASA (OB:ZAL), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Zalaris.

See our latest analysis for Zalaris

How Does Total Compensation For Hans-Petter Mellerud Compare With Other Companies In The Industry?

According to our data, Zalaris ASA has a market capitalization of kr844m, and paid its CEO total annual compensation worth kr3.6m over the year to December 2019. That's a slight decrease of 6.4% on the prior year. Notably, the salary which is kr3.40m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below kr1.8b, we found that the median total CEO compensation was kr2.7m. Accordingly, our analysis reveals that Zalaris ASA pays Hans-Petter Mellerud north of the industry median. What's more, Hans-Petter Mellerud holds kr127m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. Zalaris pays out 93% of remuneration in the form of a salary, significantly higher than the industry average. 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 Zalaris ASA's Growth Numbers

Over the last three years, Zalaris ASA has shrunk its earnings per share by 86% per year. In the last year, its revenue is up 3.9%.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Zalaris ASA Been A Good Investment?

Since shareholders would have lost about 22% over three years, some Zalaris ASA investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we touched on above, Zalaris ASA is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. What's equally worrying is that the company isn't growing by our analysis. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for Zalaris (of which 2 are concerning!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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