We Think The Compensation For Aker BP ASA's (OB:AKRBP) CEO Looks About Right

Key Insights

• Aker BP will host its Annual General Meeting on 13th of May
• CEO Karl Hersvik's total compensation includes salary of US$920.0k
• The total compensation is 56% less than the average for the industry
• Aker BP's EPS grew by 7.9% over the past three years while total shareholder loss over the past three years was 17%

We've discovered 2 warning signs about Aker BP. View them for free.

Performance at Aker BP ASA (OB:AKRBP) has been rather uninspiring recently and shareholders may be wondering how CEO Karl Hersvik plans to fix this. At the next AGM coming up on 13th of May, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.

Check out our latest analysis for Aker BP

How Does Total Compensation For Karl Hersvik Compare With Other Companies In The Industry?

According to our data, Aker BP ASA has a market capitalization of kr140b, and paid its CEO total annual compensation worth US$1.5m over the year to December 2024. That's a fairly small increase of 6.6% over the previous year. We note that the salary portion, which stands at US$920.0k constitutes the majority of total compensation received by the CEO.

On comparing similar companies in the Norwegian Oil and Gas industry with market capitalizations above kr82b, we found that the median total CEO compensation was US$3.4m. Accordingly, Aker BP pays its CEO under the industry median.

Component	2024	2023	Proportion (2024)
Salary	US$920k	US$899k	61%
Other	US$577k	US$505k	39%
Total Compensation	US$1.5m	US$1.4m	100%

Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. There isn't a significant difference between Aker BP and the broader market, in terms of salary allocation in the overall compensation package. 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 Aker BP ASA's Growth Numbers

Aker BP ASA's earnings per share (EPS) grew 7.9% per year over the last three years. It saw its revenue drop 9.4% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Aker BP ASA Been A Good Investment?

Given the total shareholder loss of 17% over three years, many shareholders in Aker BP ASA are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders have earned a negative share price return is certainly disconcerting. Perhaps the poor price performance may have something to do with the the fact that earnings per share growth has not been performing as strongly either. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for Aker BP you should be aware of, and 1 of them is significant.

Switching gears from Aker BP, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.