Is REC Silicon ASA's (OB:REC) CEO Pay Fair?

In 2013 Tore Torvund was appointed CEO of REC Silicon ASA (OB:REC). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

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How Does Tore Torvund's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that REC Silicon ASA has a market cap of øre1.8b, and is paying total annual CEO compensation of US$1.8m. (This is based on the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$784k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$100m to US$400m. The median total CEO compensation was US$430k.

As you can see, Tore Torvund is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean REC Silicon ASA is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at REC Silicon, below.

Is REC Silicon ASA Growing?

Over the last three years REC Silicon ASA has shrunk its earnings per share by an average of 67% per year. It saw its revenue drop -8.8% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO.

Shareholders might be interested in this free visualization of analyst forecasts. .

Has REC Silicon ASA Been A Good Investment?

With a three year total loss of 55%, REC Silicon ASA would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared total CEO remuneration at REC Silicon ASA with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Over the same period, investors would have come away with nothing in the way of share price gains. In our opinion the CEO might be paid too generously! Shareholders may want to check for free if REC Silicon insiders are buying or selling shares.

Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.