Does AF Gruppen ASA's (OB:AFG) CEO Pay Matter?
Morten Grongstad became the CEO of AF Gruppen ASA (OB:AFG) in 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. 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.
Check out our latest analysis for AF Gruppen
How Does Morten Grongstad's Compensation Compare With Similar Sized Companies?
According to our data, AF Gruppen ASA has a market capitalization of kr14b, and paid its CEO total annual compensation worth kr8.7m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at kr3.9m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of kr11b to kr35b. The median total CEO compensation was kr8.2m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where AF Gruppen stands. On a sector level, around 46% of total compensation represents salary and 54% is other remuneration. AF Gruppen does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.
That means Morten Grongstad receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. The graphic below shows how CEO compensation at AF Gruppen has changed from year to year.
Is AF Gruppen ASA Growing?
AF Gruppen ASA has seen earnings per share (EPS) move positively by an average of 9.3% a year, over the last three years (using a line of best fit). It achieved revenue growth of 21% over the last year.
I think the revenue growth is good. And the improvement in earnings per share is modest but respectable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. Shareholders might be interested in this free visualization of analyst forecasts.
Has AF Gruppen ASA Been A Good Investment?
With a total shareholder return of 2.2% over three years, AF Gruppen ASA has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
Morten Grongstad is paid around the same as most CEOs of similar size companies.
We see room for improved growth, as well as fairly unremarkable returns over the last three years. But we don't think the CEO compensation is a problem. Taking a breather from CEO compensation, we've spotted 3 warning signs for AF Gruppen (of which 1 makes us a bit uncomfortable!) you should know about in order to have a holistic understanding of the stock.
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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