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Paal Kibsgaard became the CEO of Schlumberger Limited (NYSE:SLB) in 2011. First, this article will compare CEO compensation with compensation at other large companies. 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 process should give us an idea about how appropriately the CEO is paid.
How Does Paal Kibsgaard’s Compensation Compare With Similar Sized Companies?
Our data indicates that Schlumberger Limited is worth US$63b, and total annual CEO compensation is US$21m. (This figure is for the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$2.0m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
It would therefore appear that Schlumberger Limited pays Paal Kibsgaard more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Schlumberger has changed over time.
Is Schlumberger Limited Growing?
Over the last three years Schlumberger Limited has shrunk its earnings per share by an average of 2.4% per year (measured with a line of best fit). In the last year, its revenue is up 7.8%.
Unfortunately there is a complete lack of earnings per share improvement, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Schlumberger Limited Been A Good Investment?
Given the total loss of 32% over three years, many shareholders in Schlumberger Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We compared total CEO remuneration at Schlumberger Limited with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.We think many shareholders would be underwhelmed with the business growth over the last three years.
Just as bad, share price gains for investors have failed to materialize, over the same period. This analysis suggests to us that the CEO is paid too generously! So you may want to check if insiders are buying Schlumberger shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.