Shareholders Will Likely Find Telenor ASA's (OB:TEL) CEO Compensation Acceptable

Key Insights

• Telenor's Annual General Meeting to take place on 7th of May
• Salary of kr7.51m is part of CEO Sigve Brekke's total remuneration
• Total compensation is 52% below industry average
• Telenor's total shareholder return over the past three years was 9.2% while its EPS was down 53% over the past three years

Shareholders may be wondering what CEO Sigve Brekke plans to do to improve the less than great performance at Telenor ASA (OB:TEL) recently. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 7th of May. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Telenor

How Does Total Compensation For Sigve Brekke Compare With Other Companies In The Industry?

At the time of writing, our data shows that Telenor ASA has a market capitalization of kr177b, and reported total annual CEO compensation of kr17m for the year to December 2023. This means that the compensation hasn't changed much from last year. While we always look at total compensation first, our analysis shows that the salary component is less, at kr7.5m.

On comparing similar companies in the Norway Telecom industry with market capitalizations above kr89b, we found that the median total CEO compensation was kr34m. This suggests that Sigve Brekke is paid below the industry median. What's more, Sigve Brekke holds kr23m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	kr7.5m	kr7.3m	45%
Other	kr9.1m	kr9.0m	55%
Total Compensation	kr17m	kr16m	100%

On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. Telenor sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Telenor ASA's Growth

Over the last three years, Telenor ASA has shrunk its earnings per share by 53% per year. In the last year, its revenue is up 4.7%.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Telenor ASA Been A Good Investment?

With a total shareholder return of 9.2% over three years, Telenor ASA has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

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 2 warning signs for Telenor you should be aware of, and 1 of them is concerning.

Important note: Telenor 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. 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.