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How Should Investors React To Kitron ASA's (OB:KIT) CEO Pay?

Simply Wall St

In 2014 Lars Nilsson was appointed CEO of Kitron ASA (OB:KIT). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Kitron

How Does Lars Nilsson's Compensation Compare With Similar Sized Companies?

Our data indicates that Kitron ASA is worth kr1.6b, and total annual CEO compensation was reported as kr5.3m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at kr2.8m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of kr1.0b to kr4.1b. The median total CEO compensation was kr5.2m.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Kitron stands. On an industry level, roughly 62% of total compensation represents salary and 38% is other remuneration. Kitron does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.

That means Lars Nilsson receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance. You can see, below, how CEO compensation at Kitron has changed over time.

OB:KIT CEO Compensation April 9th 2020

Is Kitron ASA Growing?

Over the last three years Kitron ASA has seen earnings per share (EPS) move in a positive direction by an average of 15% per year (using a line of best fit). It achieved revenue growth of 26% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. It could be important to check this free visual depiction of what analysts expect for the future.

Has Kitron ASA Been A Good Investment?

Boasting a total shareholder return of 52% over three years, Kitron ASA has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Lars Nilsson is paid around the same as most CEOs of similar size companies.

Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. Shifting gears from CEO pay for a second, we've picked out 2 warning signs for Kitron that investors should be aware of in a dynamic business environment.

Important note: Kitron may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.