Borgestad ASA's (OB:BOR) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Borgestad to hold its Annual General Meeting on 3rd of June
• Total pay for CEO Pal Larsen includes kr2.80m salary
• The overall pay is 167% above the industry average
• Borgestad's EPS grew by 126% over the past three years while total shareholder loss over the past three years was 86%

Shareholders of Borgestad ASA (OB:BOR) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 3rd of June could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Borgestad

Comparing Borgestad ASA's CEO Compensation With The Industry

Our data indicates that Borgestad ASA has a market capitalization of kr609m, and total annual CEO compensation was reported as kr3.1m for the year to December 2023. Notably, that's a decrease of 12% over the year before. We note that the salary portion, which stands at kr2.80m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Norway Basic Materials industry with market capitalizations below kr2.1b, reported a median total CEO compensation of kr1.2m. This suggests that Pal Larsen is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	kr2.8m	kr2.6m	90%
Other	kr309k	kr906k	10%
Total Compensation	kr3.1m	kr3.5m	100%

On an industry level, around 47% of total compensation represents salary and 53% is other remuneration. According to our research, Borgestad 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.

Borgestad ASA's Growth

Borgestad ASA has seen its earnings per share (EPS) increase by 126% a year over the past three years. In the last year, its revenue is up 18%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Borgestad ASA Been A Good Investment?

Few Borgestad ASA shareholders would feel satisfied with the return of -86% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 Borgestad you should be aware of, and 1 of them makes us a bit uncomfortable.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.