Odfjell Drilling Ltd.'s (OB:ODL) CEO Compensation Is Looking A Bit Stretched At The Moment

CEO Simen Lieungh has done a decent job of delivering relatively good performance at Odfjell Drilling Ltd. (OB:ODL) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 21 September 2022. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for Odfjell Drilling

How Does Total Compensation For Simen Lieungh Compare With Other Companies In The Industry?

At the time of writing, our data shows that Odfjell Drilling Ltd. has a market capitalization of kr6.6b, and reported total annual CEO compensation of US$2.4m for the year to December 2021. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at US$640k.

On examining similar-sized companies in the industry with market capitalizations between kr4.0b and kr16b, we discovered that the median CEO total compensation of that group was US$1.4m. This suggests that Simen Lieungh is paid more than the median for the industry. Moreover, Simen Lieungh also holds kr2.9m worth of Odfjell Drilling stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	US$640k	US$586k	27%
Other	US$1.8m	US$1.7m	73%
Total Compensation	US$2.4m	US$2.3m	100%

On an industry level, around 68% of total compensation represents salary and 32% is other remuneration. Odfjell Drilling pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Odfjell Drilling Ltd.'s Growth

Over the past three years, Odfjell Drilling Ltd. has seen its earnings per share (EPS) grow by 48% per year. Its revenue is up 7.8% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Odfjell Drilling Ltd. Been A Good Investment?

Odfjell Drilling Ltd. has served shareholders reasonably well, with a total return of 11% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

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 Odfjell Drilling you should be aware of, and 1 of them can't be ignored.

Important note: Odfjell Drilling is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.