The underwhelming share price performance of Odfjell Drilling Ltd. (OB:ODL) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 23 June 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
Comparing Odfjell Drilling Ltd.'s CEO Compensation With the industry
According to our data, Odfjell Drilling Ltd. has a market capitalization of kr5.5b, and paid its CEO total annual compensation worth US$1.1m over the year to December 2020. That's a notable decrease of 57% on last year. In particular, the salary of US$586.0k, makes up a fairly large portion of the total compensation being paid to the CEO.
On comparing similar companies from the same industry with market caps ranging from kr3.3b to kr13b, we found that the median CEO total compensation was US$1.3m. This suggests that Odfjell Drilling remunerates its CEO largely in line with the industry average. Furthermore, Simen Lieungh directly owns kr2.4m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 63% of total compensation out of all the companies we analyzed, while other remuneration made up 37% of the pie. In Odfjell Drilling's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Odfjell Drilling Ltd.'s Growth
Odfjell Drilling Ltd.'s earnings per share (EPS) grew 34% per year over the last three years. In the last year, its revenue is up 12%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Odfjell Drilling Ltd. Been A Good Investment?
With a total shareholder return of -31% over three years, Odfjell Drilling Ltd. shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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.
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. We identified 3 warning signs for Odfjell Drilling (2 are concerning!) that you should be aware of before investing here.
Switching gears from Odfjell Drilling, 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. 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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