This Is Why Shareholders May Want To Hold Back On A Pay Rise For Norsk Hydro ASA's (OB:NHY) CEO

Key Insights

• Norsk Hydro will host its Annual General Meeting on 9th of May
• Salary of kr6.82m is part of CEO Eivind Kallevik's total remuneration
• The total compensation is 64% less than the average for the industry
• Over the past three years, Norsk Hydro's EPS fell by 14% and over the past three years, the total loss to shareholders 4.3%

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The underwhelming performance at Norsk Hydro ASA (OB:NHY) recently has probably not pleased shareholders. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 9th of May. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

View our latest analysis for Norsk Hydro

How Does Total Compensation For Eivind Kallevik Compare With Other Companies In The Industry?

At the time of writing, our data shows that Norsk Hydro ASA has a market capitalization of kr110b, and reported total annual CEO compensation of kr14m for the year to December 2024. That's a notable increase of 39% on last year. We note that the salary of kr6.82m makes up a sizeable portion of the total compensation received by the CEO.

For comparison, other companies in the Norway Metals and Mining industry with market capitalizations above kr83b, reported a median total CEO compensation of kr38m. Accordingly, Norsk Hydro pays its CEO under the industry median. Furthermore, Eivind Kallevik directly owns kr5.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	kr6.8m	kr4.6m	50%
Other	kr6.8m	kr5.2m	50%
Total Compensation	kr14m	kr9.8m	100%

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. In Norsk Hydro's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Norsk Hydro ASA's Growth

Norsk Hydro ASA has reduced its earnings per share by 14% a year over the last three years. In the last year, its revenue is up 11%.

Overall this is not a very positive result for shareholders. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Norsk Hydro ASA Been A Good Investment?

Given the total shareholder loss of 4.3% over three years, many shareholders in Norsk Hydro ASA are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Norsk Hydro that investors should be aware of in a dynamic business environment.

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. 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.