We Discuss Why Reach Subsea ASA's (OB:REACH) CEO May Deserve A Higher Pay Packet

Shareholders will probably not be disappointed by the robust results at Reach Subsea ASA (OB:REACH) recently and they will be keeping this in mind as they go into the AGM on 26 May 2021. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. We have prepared some analysis below and we show why we think CEO compensation looks decent with even the possibility for a raise.

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 kr441m, and paid its CEO total annual compensation worth kr1.7m over the year to December 2020. Notably, that's a decrease of 10% over the year before. We note that the salary portion, which stands at kr1.53m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below kr1.7b, we found that the 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, roughly 63% of total compensation represents salary and 37% is other remuneration. Reach Subsea pays out 89% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Reach Subsea ASA's Growth

Over the past three years, Reach Subsea ASA has seen its earnings per share (EPS) grow by 78% per year. Its revenue is up 24% over the last year.

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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Reach Subsea ASA Been A Good Investment?

With a total shareholder return of 27% over three years, Reach Subsea ASA shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Reach Subsea that investors should think about before committing capital to this stock.

Switching gears from Reach Subsea, 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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