The impressive results at Reach Subsea ASA (OB:REACH) recently will be great news for shareholders. At the upcoming AGM on 11 June 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.
Check out our latest analysis for Reach Subsea
How Does Total Compensation For Jostein Alendal Compare With Other Companies In The Industry?
According to our data, Reach Subsea ASA has a market capitalization of kr460m, and paid its CEO total annual compensation worth kr1.7m over the year to December 2020. We note that's a decrease of 10% compared to last year. In particular, the salary of kr1.53m, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under kr1.7b, the reported median total CEO compensation was kr2.5m. In other words, Reach Subsea pays its CEO lower than the industry median.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | kr1.5m | kr1.5m | 89% |
| Other | kr187k | kr394k | 11% |
| Total Compensation | kr1.7m | kr1.9m | 100% |
On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. According to our research, Reach Subsea has allocated a higher percentage of pay to salary in comparison to the wider industry. 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 Reach Subsea ASA's Growth Numbers
Reach Subsea ASA's earnings per share (EPS) grew 78% per year over the last three years. It achieved revenue growth of 24% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Reach Subsea ASA Been A Good Investment?
Boasting a total shareholder return of 34% over three years, Reach Subsea ASA has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. However, despite the strong growth in earnings and share price growth, the focus for shareholders would be how the company plans to steer the company towards sustainable profitability in the near future.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Reach Subsea that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
When trading Reach Subsea or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
New: AI Stock Screener & Alerts
Our new AI Stock Screener scans the market every day to uncover opportunities.
• Dividend Powerhouses (3%+ Yield)
• Undervalued Small Caps with Insider Buying
• High growth Tech and AI Companies
Or build your own from over 50 metrics.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
About OB:REACH
High growth potential with excellent balance sheet.
