Kjetil Grønskag became the CEO of RomReal Limited (OB:ROM) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. 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 RomReal
How Does Total Compensation For Kjetil Grønskag Compare With Other Companies In The Industry?
According to our data, RomReal Limited has a market capitalization of kr82m, and paid its CEO total annual compensation worth €59k over the year to December 2019. That's a notable increase of 66% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth €59k.
In comparison with other companies in the industry with market capitalizations under kr1.7b, the reported median total CEO compensation was €219k. This suggests that Kjetil Grønskag is paid below the industry median. Moreover, Kjetil Grønskag also holds kr8.8m worth of RomReal stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | €59k | €36k | 100% |
| Other | - | - | - |
| Total Compensation | €59k | €36k | 100% |
On an industry level, around 64% of total compensation represents salary and 36% is other remuneration. Speaking on a company level, RomReal prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at RomReal Limited's Growth Numbers
Over the last three years, RomReal Limited has shrunk its earnings per share by 71% per year. It achieved revenue growth of 58% over the last year.
Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has RomReal Limited Been A Good Investment?
Given the total shareholder loss of 24% over three years, many shareholders in RomReal Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
RomReal rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Kjetil is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. But poor shareholder returns EPS growth have hampered the company over the past three years. On the flip side, recent revenue growth has been positive. Though we believe Kjetil is modestly compensated, shareholders might want to see positive shareholder returns before agreeing compensation should be raised.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for RomReal that you should be aware of before investing.
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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About OB:ROM
Flawless balance sheet with acceptable track record.
