How Should Investors React To Gjensidige Forsikring's (OB:GJF) CEO Pay?

This article will reflect on the compensation paid to Helge Baastad who has served as CEO of Gjensidige Forsikring ASA (OB:GJF) since 2003. 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 Gjensidige Forsikring

Comparing Gjensidige Forsikring ASA's CEO Compensation With the industry

Our data indicates that Gjensidige Forsikring ASA has a market capitalization of kr93b, and total annual CEO compensation was reported as kr9.9m for the year to December 2019. Notably, that's an increase of 9.9% over the year before. In particular, the salary of kr5.33m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies in the industry with market capitalizations above kr71b, we found that the median total CEO compensation was kr45m. This suggests that Helge Baastad is paid below the industry median. Furthermore, Helge Baastad directly owns kr12m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 43% of total compensation out of all the companies we analyzed, while other remuneration made up 57% of the pie. According to our research, Gjensidige Forsikring has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Gjensidige Forsikring ASA's Growth

Over the past three years, Gjensidige Forsikring ASA has seen its earnings per share (EPS) grow by 1.2% per year. It achieved revenue growth of 5.1% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. 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 Gjensidige Forsikring ASA Been A Good Investment?

Boasting a total shareholder return of 42% over three years, Gjensidige Forsikring ASA has done well by shareholders. 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.

In Summary...

As we touched on above, Gjensidige Forsikring ASA is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, shareholder returns have been have been very pleasing, over the last three years, and that should put a smile on the faces of investors. So, considering these tasty returns, CEO compensation seems quite appropriate.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Gjensidige Forsikring that investors should think about before committing capital to this stock.

Switching gears from Gjensidige Forsikring, 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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