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Should You Worry About Orion Oyj's (HEL:ORNBV) CEO Pay Cheque?

Simply Wall St

Timo Lappalainen has been the CEO of Orion Oyj (HEL:ORNBV) since 2008. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. 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.

See our latest analysis for Orion Oyj

How Does Timo Lappalainen's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Orion Oyj has a market cap of €5.6b, and reported total annual CEO compensation of €1.3m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at €484k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from €3.6b to €11b, and discovered that the median CEO total compensation of that group was €799k.

As you can see, Timo Lappalainen is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Orion Oyj is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Orion Oyj, below.

HLSE:ORNBV CEO Compensation, November 14th 2019

Is Orion Oyj Growing?

On average over the last three years, Orion Oyj has shrunk earnings per share by 10% each year (measured with a line of best fit). In the last year, its revenue is up 5.9%.

Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.

Has Orion Oyj Been A Good Investment?

Orion Oyj has served shareholders reasonably well, with a total return of 17% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

We compared total CEO remuneration at Orion Oyj with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

We think many shareholders would be underwhelmed with the business growth over the last three years. While shareholder returns are acceptable, they don't delight. So we doubt many shareholders would consider the CEO pay to be particularly modest! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Orion Oyj (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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. Thank you for reading.

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