It's Unlikely That The CEO Of BerGenBio ASA (OB:BGBIO) Will See A Huge Pay Rise This Year

In the past three years, the share price of BerGenBio ASA (OB:BGBIO) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 19 March 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for BerGenBio

Comparing BerGenBio ASA's CEO Compensation With the industry

According to our data, BerGenBio ASA has a market capitalization of kr2.8b, and paid its CEO total annual compensation worth kr4.7m over the year to December 2020. Notably, that's an increase of 12% over the year before. In particular, the salary of kr3.09m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between kr1.7b and kr6.7b, we discovered that the median CEO total compensation of that group was kr4.1m. This suggests that BerGenBio remunerates its CEO largely in line with the industry average.

Component	2020	2019	Proportion (2020)
Salary	kr3.1m	kr2.9m	65%
Other	kr1.6m	kr1.3m	35%
Total Compensation	kr4.7m	kr4.2m	100%

Talking in terms of the industry, salary represented approximately 57% of total compensation out of all the companies we analyzed, while other remuneration made up 43% of the pie. It's interesting to note that BerGenBio pays out a greater portion of remuneration through salary, compared to the industry. 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 BerGenBio ASA's Growth Numbers

BerGenBio ASA has seen its earnings per share (EPS) increase by 4.0% a year over the past three years. In the last year, its revenue is down 93%.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 BerGenBio ASA Been A Good Investment?

With a total shareholder return of -31% over three years, BerGenBio ASA shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for BerGenBio (1 is potentially serious!) that you should be aware of before investing here.

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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