How Should Investors React To Aker BP ASA's (OB:AKERBP) CEO Pay?
In 2014 Karl Hersvik was appointed CEO of Aker BP ASA (OB:AKERBP). This analysis aims first to contrast CEO compensation with 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 method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Aker BP
How Does Karl Hersvik's Compensation Compare With Similar Sized Companies?
Our data indicates that Aker BP ASA is worth kr91b, and total annual CEO compensation was reported as US$2.0m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$783k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$1.6m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
So Karl Hersvik is paid around the average of the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see, below, how CEO compensation at Aker BP has changed over time.
Is Aker BP ASA Growing?
Aker BP ASA has increased its earnings per share (EPS) by an average of 41% a year, over the last three years (using a line of best fit). Its revenue is down 8.7% over last year.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Aker BP ASA Been A Good Investment?
Boasting a total shareholder return of 113% over three years, Aker BP ASA has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
Karl Hersvik is paid around the same as most CEOs of large companies.
Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Indeed, many might consider the pay rather modest, given the solid company performance! Whatever your view on compensation, you might want to check if insiders are buying or selling Aker BP shares (free trial).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
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. Thank you for reading.
