In 2014 Jostein Alendal was appointed CEO of Reach Subsea ASA (OB:REACH). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Jostein Alendal’s Compensation Compare With Similar Sized Companies?
Our data indicates that Reach Subsea ASA is worth øre306m, and total annual CEO compensation is øre1.4m. (This number is for the twelve months until December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at øre1.3m. We examined a group of similar sized companies, with market capitalizations of below øre1.7b. The median CEO total compensation in that group is øre2.6m.
A first glance this seems like a real positive for shareholders, since Jostein Alendal is paid less than the average total compensation paid by similar sized companies. Though positive, it’s important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at Reach Subsea has changed from year to year.
Is Reach Subsea ASA Growing?
On average over the last three years, Reach Subsea ASA has shrunk earnings per share by 12% each year (measured with a line of best fit). In the last year, its revenue is up 87%.
Investors should note that, over three years, earnings per share are down. On the other hand, the strong revenue growth suggests the business is growing. It’s hard to reach a conclusion about business performance right now. This may be one to watch. Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Reach Subsea ASA Been A Good Investment?
Reach Subsea ASA has served shareholders reasonably well, with a total return of 13% over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
It appears that Reach Subsea ASA remunerates its CEO below most similar sized companies.
It’s well worth noting that while Jostein Alendal is paid less than most company leaders (at companies of similar size), share price performance has been somewhat uninspiring. But on this analysis I see no issue with the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Reach Subsea shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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