This article will reflect on the compensation paid to Tore Torvund who has served as CEO of REC Silicon ASA (OB:REC) since 2013. This analysis will also assess whether REC Silicon pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing REC Silicon ASA’s CEO Compensation With the industry
Our data indicates that REC Silicon ASA has a market capitalization of kr776m, and total annual CEO compensation was reported as US$992k for the year to December 2019. That’s a fairly small increase of 4.4% over the previous year. In particular, the salary of US$807.6k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under kr1.9b, the reported median total CEO compensation was US$331k. Accordingly, our analysis reveals that REC Silicon ASA pays Tore Torvund north of the industry median.
On an industry level, roughly 58% of total compensation represents salary and 42% is other remuneration. It’s interesting to note that REC Silicon pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at REC Silicon ASA’s Growth Numbers
REC Silicon ASA has seen its earnings per share (EPS) increase by 9.8% a year over the past three years. In the last year, its revenue is down 29%.
We would prefer it if there was revenue growth, but the modest EPS growth gives us some relief. These two metrics are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching. 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 REC Silicon ASA Been A Good Investment?
Given the total shareholder loss of 74% over three years, many shareholders in REC Silicon ASA are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, REC Silicon pays its CEO higher than the norm for similar-sized companies belonging to the same industry. The growth in the business has been uninspiring, but the shareholder returns for REC Silicon have arguably been worse, over the last three years. And the situation doesn’t look all that good when you see Tore is remunerated higher than the industry average. With such poor returns, we would understand if shareholders had concerns related to the CEO’s pay. i
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We’ve identified 4 warning signs for REC Silicon that investors should be aware of in a dynamic business environment.
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.
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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. 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.
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