Shareholders May Be A Bit More Conservative With Targovax ASA's (OB:TRVX) CEO Compensation For Now

Shareholders of Targovax ASA (OB:TRVX) 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 17 March 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. 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.

See our latest analysis for Targovax

How Does Total Compensation For Øystein Soug Compare With Other Companies In The Industry?

Our data indicates that Targovax ASA has a market capitalization of kr757m, and total annual CEO compensation was reported as kr3.6m for the year to December 2020. That's just a smallish increase of 4.5% on last year. Notably, the salary which is kr2.84m, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below kr1.7b, reported a median total CEO compensation of kr3.6m. From this we gather that Øystein Soug is paid around the median for CEOs in the industry. Furthermore, Øystein Soug directly owns kr1.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	kr2.8m	kr2.7m	78%
Other	kr808k	kr759k	22%
Total Compensation	kr3.6m	kr3.5m	100%

Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. According to our research, Targovax has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Targovax ASA's Growth

Targovax ASA has seen its earnings per share (EPS) increase by 17% a year over the past three years. Its revenue is down 72% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Targovax ASA Been A Good Investment?

The return of -46% over three years would not have pleased Targovax ASA shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 6 warning signs for Targovax you should be aware of, and 2 of them are potentially serious.

Important note: Targovax is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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