It's Unlikely That The CEO Of Akastor ASA (OB:AKAST) Will See A Huge Pay Rise This Year

Shareholders of Akastor ASA (OB:AKAST) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 15 April 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Akastor

Comparing Akastor ASA's CEO Compensation With the industry

Our data indicates that Akastor ASA has a market capitalization of kr1.7b, and total annual CEO compensation was reported as kr7.3m for the year to December 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of kr4.69m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between kr849m and kr3.4b had a median total CEO compensation of kr7.3m. From this we gather that Karl Kjelstad is paid around the median for CEOs in the industry. What's more, Karl Kjelstad holds kr2.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	kr4.7m	kr4.6m	64%
Other	kr2.6m	kr2.6m	36%
Total Compensation	kr7.3m	kr7.2m	100%

On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. Our data reveals that Akastor allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Akastor ASA's Growth Numbers

Akastor ASA's earnings per share (EPS) grew 44% per year over the last three years. In the last year, its revenue is down 15%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Akastor ASA Been A Good Investment?

With a total shareholder return of -61% over three years, Akastor ASA shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

Whatever your view on compensation, you might want to check if insiders are buying or selling Akastor shares (free trial).

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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