This Is Why Solstad Offshore ASA's (OB:SOFF) CEO Compensation Looks Appropriate

Key Insights

• Solstad Offshore to hold its Annual General Meeting on 30th of May
• CEO Lars Solstad's total compensation includes salary of kr5.46m
• The total compensation is similar to the average for the industry
• Over the past three years, Solstad Offshore's EPS fell by 90% and over the past three years, the total shareholder return was 564%

Despite strong share price growth of 564% for Solstad Offshore ASA (OB:SOFF) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 30th of May. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Solstad Offshore

How Does Total Compensation For Lars Solstad Compare With Other Companies In The Industry?

At the time of writing, our data shows that Solstad Offshore ASA has a market capitalization of kr3.5b, and reported total annual CEO compensation of kr8.5m for the year to December 2023. That's a notable increase of 11% on last year. In particular, the salary of kr5.46m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Norwegian Energy Services industry with market capitalizations ranging from kr2.1b to kr8.6b, the reported median CEO total compensation was kr8.5m. This suggests that Solstad Offshore remunerates its CEO largely in line with the industry average. Furthermore, Lars Solstad directly owns kr348m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	kr5.5m	kr5.8m	64%
Other	kr3.1m	kr1.9m	36%
Total Compensation	kr8.5m	kr7.7m	100%

Speaking on an industry level, nearly 63% of total compensation represents salary, while the remainder of 37% is other remuneration. Solstad Offshore is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Solstad Offshore ASA's Growth

Over the last three years, Solstad Offshore ASA has shrunk its earnings per share by 90% per year. In the last year, its revenue is down 9.5%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Solstad Offshore ASA Been A Good Investment?

We think that the total shareholder return of 564%, over three years, would leave most Solstad Offshore ASA shareholders smiling. 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...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for Solstad Offshore that investors should look into moving forward.

Important note: Solstad Offshore 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.

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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.